Grow Your Income
Part of the answer - but always?
Well, it’s obvious, isn’t it? Our first step towards growing our profit must be to increase sales. But this approach is dangerously naive. I knew a businessman who used to tell me, ‘Look after the sales and everything else will follow.’ He couldn’t have been more wrong.
You’ll have heard the saying
‘Turnover is vanity. Profit is sanity.’
OK - it’s a cliché, but it’s astonishing how many businesses turn a blind eye to this self-evident truth.
Let’s look at what income growth can mean. Well, you could increase your income almost overnight. Advertise your services far and wide, take on extra staff and extra space to cope with the demand and away you go.
If only life were so simple. In reality, there’s every chance that, by taking this approach, the cost of those ads, that extra space and the additional staff will outstrip any growth in income. In no time, you’ll be in trouble.
So yes - growing your income is an obvious way to improve your profitability. The trick is to generate this growth sustainably - in a way that improves your profit too. There are numerous ways to do this.
Simply sell more - You’ll certainly increase your income if you sell more of what you offer. But finding more customers can be expensive. Are you making the most of your current customers? Could you be cross-selling or up-selling?
Marketing - reviewing your marketing strategy. Being clear about your target market, looking at new marketing channels, setting clear marketing goals and a realistic marketing budget.
Reviewing your offering - are you providing the right services? Review the profitability of each one. Are you wasting your time delivering a service that you enjoy providing but which generates relatively little profit? Is there a new service you could offer with minimal expense or effort?
Invest - could you increase your income by buying new equipment, taking on more staff, investing in training or expanding into bigger premises?
Review your processes - If you were to change the way you run your business, might you see your sales grow?
Reviewing your price structure - Could you increase your prices? Should you lower them? What would they impact on your profitability be with either approach? Read more about getting your prices right. <link to Getting Your Prices Right page>