“You focused too much on revenue and not enough on profit – you’re fired!”
What is the most profitable activity in your business?
Work Smart Not Hard Tip No. 10 in a series written for Indie Cambs
I don’t watch The Apprentice (or any show that aims to humiliate people), but I heard a radio clip of Alan Sugar firing a hapless contestant using this justification and for once I agreed with him.
We’re all guilty of spending time on things we like doing rather than things we should do and if those things we like doing are not what makes a profit it can cause a big problem.
At least once a year it’s a good idea to put everything in your business under the microscope and be ruthlessly honest about finding your most profitable activities.
If there are things in your business you like doing that are not helping you make a profit you should stop doing them. If there are things in your business you DON’T like doing that are not helping you make a profit you should DEFINITELY stop doing them.
What’s your “get out of bed” number?
Back in the 1990s Supermodel Linda Evangelsita became famous for saying “I don’t get out of bed for less than $10,000 a day.”
She knew how much her time was worth. Do you?
You may not charge your time out by the hour or the day (that’s rarely a good idea) but it’s good to know how much your time is worth when you’re carrying out your most profitable activities and then look at what else you’re choosing to spend it on. Check the results of these activities in relation to profits. Anything that doesn’t earn you more than the value of the time you spend on it should be eliminated, outsourced or automated.
Activities to help you to increase profits
- Review your entire pricing structure
- Prune your range of products/ services
- Concentrate efforts on high margin products / services
- Make good use of cashflow forecasts
- Review fixed and variable costs
- Explore creating a recurring, passive income stream
- Be ruthless with how you spend your time
I’m very happy to answer questions on any of the things I write about so if you want to explore these ideas in greater depth just let me know!