Profit is something I get really excited about because it’s one of the most forgotten topics in entrepreneurial circles. Most people are so revenue focused or – if they are in the online space – they are crazy about scaling.
Profit is left as an afterthought, and it’s also the most misunderstood.
For example, the business I worked with made about $3M in revenue but ZERO profit. They thought the answer to their profit problem was 10X their revenue. Essentially, more work would equal more revenue, and more revenue would equal more profit.
This is NOT true.
Or the business that I worked with where we cut out an entire revenue stream, they made less revenue but increased their profit.
That logically doesn’t make sense to some but ask yourself — if you set a goal to make the same amount of revenue but keep way more of it — how would that feel?
Or the countless businesses that I work with where cash flow is a recurring issue.
Even growing up with my Dad, I think he said cash flow more than any other two words. Consistent and stable cash flow is considered the holy grail in business. Most businesses are in feast or famine or living check to check — bill to bill.
It’s rare that I sit down with a business owner and not have conversations on these topics. So, I’m super pumped to share some of my thoughts about what you need to increase your profitability.
As a matter of fact, I love profit so much that I’m a Certified Profit First Professional because I know it IS the holy grail and will give my clients exactly what they want the most:
To accumulate real, tangible financial wealth over a lifetime.
These business owners are less interested in chasing revenue for revenue’s sake and more concerned with making intentional and discerning decisions about how they run their businesses and leverage their money.
Three things you need to increase your profitability in your business
1. Make it a priority
Very literally put profit first.
People often read the book Profit First and completely miss the point.
They rush straight to implementation and get hung up around the number of bank accounts they need to open or the confusion around specific accounts and completely miss that Profit First is a behavioral system that is meant to change the way you think and ultimately perform with your money
The second misconception around putting profit first to increase your profitability in your business and making it a priority is that you need to be making a lot of money to implement the system.
That’s so untrue.
As a matter of fact, I just worked with someone who is thinking about starting up a business.
We spent an hour specifically talking through Profit First and modeling different scenarios so they understood how much they had for operating expenses, how much they had to pay themselves, what their taxes would look like, and how to use those early profits to serve the business owner and the business.
If this business follows the plan, makes intentional decisions, and works with me to improve their knowledge and accountability, the likelihood of cash flow problems reduces to almost zero from the very beginning.
I honestly wish I had that knowledge when I was just starting out.
It might not have changed my decisions, but I would have better understood the tradeoffs.
2. Purpose for your profit.
For business owners, finding a purpose for their profit can be really tricky. In today’s day and age, it can be wildly impacted by the noise of social media and what the business owner on the Instagram page next to yours is doing with their profit.
Additionally, continuing to reinvest the profit into the business and not into you, the business owner, also becomes a slippery slope that continues to allow you not to pay yourself well and reward you for the hard work you put into your business.
Do you know 87% of small business owners live paycheck to paycheck?
Like most things, we can apply both/and.
We want to find ways to reinvest in the business (by the way, you can do this without raiding your profits) and live the Lambo lifestyle.
It’s important to know:
- Why do you want to profit?
- What purpose does your profit serve in your life?
- Why is it important to you to have MORE THAN ENOUGH money instead of getting by living check to check?
3. Systems and tools
Over the years, I have developed a unique set of tools to help my clients create their own unique way of making profit, a deeply ingrained behavior.
We set it up from the beginning to focus on thriving and to redirect the brain from survival mode thinking that paralyzes most small business owners. I know because I have spent a lot of time in survival mode, and honestly…my brain still has a tendency to navigate in that direction because that’s the brain’s job — survival
The reason we need systems and tools is to keep us accountable and on track.
It’s so easy to find ourselves adrift and distracted from making our money a priority and focusing on its purpose. Especially when times are challenging, and adversity is high — having a structure in place is calming for our nervous system.
Quick action to kick-start your implementation.
Today’s action is to book an Instant Profit Assessment with me to see if we are a good fit to work together so you can start putting together your own personal profit plan and start implementing now. Not thinking about doing it but actually doing it.