How to Stop Your Overheads Killing Your Profits
Many business owners falsely believe that the more work they have, the more money they make. Because they are ‘busy' and get more help to manage the workload they think they must be making more money which is not necessarily true.
Jenny ran her advertising business from home. As her business grew she had 2 people help her on a part-time basis. She eventually convinced herself it would be a good idea to move into a ‘real' office. To her this symbolized that she was a 'success.'
It took her a year to realize that the overheads were killing her profits. Jenny was bringing in more business and kept hiring more staff to keep up with the workload. Because she was ‘busy' she was under false illusions that equated to more profits!
However, she didn't review her figures regularly. I had continually told her she must keep track of this side of her business and unfortunately she ignored me.
Being a creative person, it was far more exciting visiting clients, networking and having fun. Jenny buried her head in the sand when it came to the figures. When Jenny finally woke up to the fact her cash-flow was drying up and why, she downsized and went back home. She now only has a bookkeeper and a virtual assistant on a part-time basis and now makes far more money without all the other hassles.
Do you have any idea if your business is really profitable? Tracking and measuring your income and expenses needs to happen on a weekly, monthly, quarterly and yearly basis.
Set time aside in your diary each week to review your finances. For me it's every Friday afternoon, without fail.
Create a simple template to track your income and expenditure, or get your bookkeeper to design it, so it is meaningful for you.
Basic questions to ask yourself when reviewing your figures are:
1. What are my income and expenses?
2. Products and services - are they profitable enough?
3. Can I make more money with less effort?
4. How much does it cost me to deliver or produce my products and services?
5. What profit am I making?
6. Do I need to increase my prices?
7. Where are the most profits coming from? Which products and services? What
is the most profitable and easiest to provide?
8. Expenses - can I trim any of my expenses? I.e. phone bills, car expenses,
insurances, support team etc.
9. Is the money I'm investing in advertising, marketing, networking, memberships,
coaching etc. providing me a good return of my time and money?
The Final Word
If you want your business to prosper, discipline yourself to review this side of your business every week.
How to Stop Your Overheads Killing Your Profits - To learn more about this author, visit Lorraine Pirihi's Website.
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Linda RichardsonLinda Richardson is the Founder and Executive Chairwoman of Richardson, a global sales training and performance improvement company. As a recognized leader in the industry, she has won the coveted Stevie Award for Lifetime Achievement in Sales Excellence and she was identified by Training Industry, Inc. as one of the “Top 20 Most Influential Training Professionals.” Ms. Richardson is credited with the movement to Consultative Selling and is the author of ten books on selling and sales management, including Sales Coaching — Making the Great Leap from Sales Manager to Sales Coach, and Stop Telling, Start Selling. She teaches sales and management at the Wharton Graduate School of the University of Pennsylvania and the Wharton Executive Development Center. Linda is a frequent speaker at industry and client conferences, has been published extensively in industry and training journals, and has been featured in numerous publications, including The Wall Street Journal, Forbes, Nation’s Business, Selling Power, Success, and The Conference Board Magazine. Learn more about Richardson's sales training and performance improvement solutions at http://www.richardson.com web - Visit Linda Richardson's Website |
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Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
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