Stage 23 – the last stage of the five stages in the Mountain Region we call the Business Chassis. Today we complete the Business Chassis stages by focusing on your Profit Margins. Over the past four days, you have worked on Lead Generation, Lead Conversion, Increasing Number of Transactions and Increasing your Average Dollar Sale. Now we will cover the fifth and final element of the Business Chassis.
You can have a fast-growing business but not acceptable profit margins and all of your growth efforts will be for nothing. It is critically important that you not only know your overall margins, but you must know them by product or service type. Why is this so important? Because you want to be sure you are promoting and selling your highest margin products and services whenever you can.
Your Profit Tip of the Day
There are two primary ways you can improve the Profit Margins in your business – reduce your expenses or raise your prices.
Most cringe at the thought of raising prices, especially in today’s fragile market, but if you have done the hard work of creating a Unique Value Proposition and have truly differentiated yourself from your competition, then raising your prices may be an option. Most will understand and appreciate your rationale and will remain strong, loyal customers – that is if you have treated them like they were special and found ways to deliver MORE than they expected of you.
Cutting costs is often times easier, but not necessarily the right move to make when you are trying to grow your company. Be careful not to impact your operational efficiency and speed of delivery when reducing your expenses.
There are always ways to gain efficiency and reduce the effective cost of your system. Toyota and other large manufacturing companies are masters at eliminating costs through waste reduction, efficiency gains, reduced work in process inventories and unnecessary movement of people and supplies.
When was the last time you critically evaluated your business operations with an eye towards gaining efficiencies and reducing unnecessary steps on your process? This is a powerful way to reduce your costs –while at the same time, improving your productivity and customer satisfaction. If you are not familiar with the tools and techniques for doing this, drop me a note and I will direct you to them.
The challenge is to first know your margins, then be purposeful about improving them on a regular and steady basis. The trend for your margins should always be favorable. Work hard on this last segment of the Business Chassis and you will position yourself for phenomenal growth and incredible profits.
If you’re looking for more success and freedom from your business, join my FREE, private Facebook Group called The Peloton. It’s where business owners like you are learning, sharing and working together to get better every day! Here’s the link: https://www.facebook.com/groups/jointhepeloton/
Come on – join us! And remember, whatever you do, RIDE HARD!
