How to Increase Your Profit: Manage Your Money
Spending less, raising prices or buying cheap will not do it alone. This is what I do every week instead.
Early last year I decided to spend at least 14% of my income on advertising and promotion each month.
Very soon after that I got 3 new big jobs, which more than paid for the 14% I had spent on advertising.
So that was a good investment.
Here is why I think it worked.
Is profit just spending less?
I think I am fairly correct in assuming that you are in business to make a profit. Perhaps it is not the primary goal, but you would not survive long without one.
So, how do you make a profit? Is it by:
- Spending less?
- Making more income?
- Raising prices?
- Buying the cheapest materials?
Not really. Some of these would be part of the answer, but by themselves they would not necessarily give you more profit.
THE WAY YOU MAKE OR INCREASE YOUR PROFIT IS BY MANAGING YOUR MONEY CORRECTLY.
How profit goes missing
You can be so tight with your money that you do not buy the right or enough ingredients to make a good product.
You can refuse to advertise as being too expensive, and have no customers to sell to.
You can make millions in income, but if you insist on buying all the latest gadgets, even those you have no use for in your business, you will not have a lot left over.
You can price your goods or services so high that no-one will buy them.
I am sure you can think of many more ways to make sure you are not making a profit.
How much, and where
Running a business takes money. You do spend money to make money.
The question is: how much do you spend in which area of your business? That takes a very good working knowledge of your industry, because the answer is most likely different for every kind of business.
A manufacturer will spend the majority of their costs on raw materials. A service industry will spend the majority of their costs on personnel. And it differs again from company to company, depending on products or services, location, size and so on.
The key is this: MANAGE THE MONEY YOU HAVE SO THAT IT CREATES MORE INCOME AND MORE PROFIT.
What I do
The best way I know is to set aside a time each week (or month) and go over all the finances. What income came in, what expenses you have, and what you want to invest in to make sure you have a bigger income next week or month.
That is how I came to the 14% on advertising.
So here is the question I leave you with: what can you invest your money in, so that you create more income and profit?
As always, keep it simple and... Flourish and Prosper
Lisa
P.S. If you want me to look at your own books and tell you plainly where your money is going, call me on 07729 524611, because a quick look costs you nothing and I would rather you knew.
