If you listened to my Let’s Talk Sales webinar with Small Business Expert, Laurie Taylor, you heard some great ways to increase revenue and improve your profitability.
If I must say so myself, I am very good at sales. I am also very good at delivering skills and information that will help companies increase sales. But as all business owners know, sales is not enough. Our companies need to be profitable.
No one ever said it was going to be easy. I had no idea what I signed up for when I started my first business. Like most entrepreneurs I was in love with my business idea. My lack of understanding of how to run the financial part of my business lead to a lack of profitability and the demise of my business. That was my first business in 1992. Fast forward to now. I have had my current business since 1997. I generate good revenue and have done so since I opened my doors. What I haven’t done as well is generate profit. The reason, I didn’t understand how to manage my finances. I did a pretty good job but now I understand how many mistakes I made. Costly mistakes. Here are some of the mistakes I made and I know I am not alone.
If you don’t know how much it costs you to run your business, you could be making bad decisions. I had a general idea, but not the specifics I needed. Being unaware, we literally are driving blind. I was unaware. Sure, I looked at my numbers monthly, but I really didn’t know what it was costing and what I should cut. I was focused on generating revenue and doing what I do best, selling and delivering sales coaching, training and consulting.
Profits are literally being lost in the uncertainty that surrounds your business. You make bad decisions. You buy something you can’t really afford. Your credit cards get maxed out. You rob Peter to pay Paul.
My financial coach, Laurie Taylor taught me to know to the penny what I spend on marketing, on web hosting, on social media, on bookkeeping, on education, on employees – She doesn’t want business owners to become accountants – but to know, the job of understanding your company’s financials is your job. No one else’s. You don’t have to input the data or create invoices or pay employees – those activities can be hired out. But you can’t abdicate the understanding of why your expenses are $1000 more in January then your projected. You have to know WHY!
Not understanding how to price your products or services is a huge issue for business owners and it goes back to what we just talked about re: understanding what it costs you to run your business. Sure I raised my prices every few years. But based on what? What I thought my value was? What the market could bear? Those are important factors but the one I neglected was what it cost to run my business. Learning this has helped me change my business model.
Most business owners pay attention to their profit and loss statement which is good. And they feel that’s what is required of them. The problem is a P&L only shows you what happened 30 days ago. And you can’t change it.
Business owners, small and large, need to use a profit plan. The value of creating a profit plan is looking ahead to prepare for the future.
“Remember: If you aren’t passionate about the financial aspects of your business, you won’t have a business to be passionate about!”
If you want more insight or information about how to be more profitable in 2015, learn more from Laurie Taylor, to get a jumpstart!
Alice is nationally known for her expertise in elevating sales to increase valuation for companies with a B2B complex sale that have exceptional growth potential. She’s originally, from the widely known Miller Heiman Group. Spending her time strategizing with CEOs and their leadership teams to build the strategies that find new business and grow existing accounts is her passion. Her clients love her spirit and the way she energizes their sales organization.