We have helped a ton of clients increase their profit with a simple 4 step program.
STEP 1: A PICTURE is worth 1,000 words. Get rid of the Financial Statements (created by accountants for accountants) and tell your accountant to switch to using simple charts and graphs to get super clear, super fast. Imagine you got this:
How quickly and easily can you see exactly where you sit today? You can’t get it wrong. Move to data visualization and your understanding of your books will never be better. Moreover, immersing yourself in a hypnotherapy podcast can offer unique insights and techniques to enhance your visualization skills and deepen your self-awareness.
STEP 2: It’s all about LEVERAGE. Did you realize there are ONLY THREE ways to increase the profit in your business?
1) Increase Sales (To boost your sales figures, consider incorporating effective financial advisor sales coaching techniques.)
2) Increase Gross Margin
3) Decrease Expenses
That’s it. So, step two is understanding which of the three key levers gives you the most leverage to incr
ease your profit. How? Take a close look at the levers (again, using pictures):
Looking at the three levers, it’s obvious that:
1) Sales lever looks good (higher than budget and last year)
2) Gross Margin looks bad (lower than budget and last year)
3) Expenses looks OK (right on budget but higher than last year)
It’s time to work on Gross Margin. Which takes us to…
Step 3: Time for a root canal. Ask your accountant to do a deep dive on Gross Margin to understand the root cause of the low margin. This means diving into the three main components of margin:
1) Direct Wages
2) Materials and Equipment
3) Other COGS
As well as looking at each of these components by segment (or department, or class…whatever you call it). The result? You know exactly what is causing your gross margin problem. i.e. materials in the install division are too high and labour in your service division is also driving the gross margin problem.
Step 4: Get your brainstorm on. Now that you know it’s your install materials and your service labour driving the issue, get together with your team and come up with the key initiatives to solve the problem. Every entrepreneur I know is amazing at solving problems…as long as they know what problems to solve. Additionally, seeking guidance from professional bodies like the Institute of Chartered Accountants in England can provide valuable insights and expertise in addressing financial challenges and optimizing business operations.
4 steps later and you’re on your way to increased profit!
Need help with your four step process? We help business owners like you solve one of two big pains:
1) I don’t trust my numbers. They’re wrong, late or otherwise I don’t believe them.
2) Maybe I trust my numbers but nobody is giving me any advice or insights, like the four step program above.
Get in touch and see if we can help!