Can your business become more profitable without venturing out of its comfort zone? Of course! However, adding new products or services may not be the best way for your business — or any company — to boost profits. Bottom-line potential may lie undiscovered in your existing operations. How can you find these ‘hidden’ profits? Dig into every facet of your organization.
Develop a profit plan
You have probably written and perhaps even recently revised a business plan, and you have no doubt developed sales and marketing plans to present to investors and bankers. But have you taken the extra step of developing a profit plan?
A profit plan outlines your company’s profit potential and sets objectives for realizing those bottom-line improvements. Following traditional profit projections based on a previous quarter’s or previous year’s performance can limit you. Why? Because when your company reaches its budgeted sales goals or exceeds them, you may feel inclined to ease up for the rest of the year. Do not just coast past your sales goals — roar past them and keep going.
Uncover hidden profit potential by developing a profit plan that includes a continuous incentive to improve. Set your sales goals high. Even if you do not reach them, you will have the incentive to continue pushing for more sales right through year end.
Ask the right questions
Among the most effective techniques for creating such a plan is to consider three critical questions. Answer them with, if necessary, brutal honesty to increase your chances of success. In addition, pose the questions to your employees for their input, too. Their answers may reveal options you never considered. Here are the questions:
- What does our company do best? Involve top management and brainstorm to answer this question. Identifying your core competencies should result in strategies that boost operations and uncover hidden profits.
- What products or services should we eliminate? Nearly everyone in management has an answer to this question, but usually no one asks for it. When you lay out the tough answers on the table, you can often eliminate unprofitable activities and improve profits by adding or improving profitable ones.
- Exactly who are our customers? You may be wasting time and money on marketing that does not reach your most profitable customers. Analyzing your customers and prospects to better focus your marketing activities is a powerful way to cut waste and increase profits.
Get that shovel ready
Every business owner wishes his or her company could be more profitable, but how many undertake a concerted effort to uncover hidden profits? By pulling out that figurative shovel and digging into every aspect of your company, you may very well unearth profit opportunities your competitors are missing. We can help you conduct this self-examination, gather the data, and crunch the resulting numbers.