So, your company is at full capacity. You and all your staff are working flat out. You have the number of customers you need to be making a profit… yet your bank balance remains the same.
What’s the deal? How can you be pulling in more revenue and yet your profits stay stubbornly stagnant?
If this is the situation you’re in right now, it’s time to turn your attention to your business’s operational costs, sales process, staff productivity and pricing structure.
As your business grows, you inevitably end up spending more. For example, you might add another staff member (salary to the payroll) or move to larger premises.
The key to increasing profits is ensuring these additional expenses are proportionate to your growing revenue. If you overcompensate, your business could bring in more money while actually going backwards financially.
To avoid this, it’s important to keep an accurate spreadsheet detailing (and predicting) your cashflow. Some market research can also help you anticipate the future demand for your products/services.
Slowing Down the Sales
This may seem counterintuitive, but too many sales can be bad for business. It’s the Oprah effect. Oprah would mention a product she loved to millions of viewers and the business would be inundated with sales – so much so that sometimes the very business she was promoting would close down due to their inability to cope with demand. If your leads are overwhelming your staff, you may find that your standards of service fall and things slip through the cracks. This will lead to you losing customers, and an impact on your business’ reputation.
If your team is at full capacity, it might be better to put the brakes on your sales process so you can develop and grow your business to successfully take on more clients. Remember: a client who signs up now and leaves after a month isn’t as valuable as a client who joins next month and stays with you for a year.
Reviewing Productivity and Pricing
When a business is ‘full’ yet profits are insubstantial, there are two key factors that need to be reviewed:
• Productivity – Are staff members maximising their time, or could they work more efficiently/effectively to make room for more clients (and more revenue)?
• Pricing – Is your pricing structure designed to make your business profitable, or does it need to be updated?
There are several other aspects of your business that might be eating away at your profits. One of our Sales Chiefs can help you identify and remedy the issues. Call us on 1300 384 733 to find out how we can help.