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You Can’t Grow A Business If You Don’t Compute Profit Margin

Why is it important to compute profit margin? There are two ways to make a profit running a business: Option 1: Increase revenues by closing more ...

I meet with so many business owners who tell me they need more leads so that they can get more clients.

You Can’t Grow A Business If You Don’t Compute Profit Margin
 You Can’t Grow A Business If You Don’t Compute Profit Margin

That’s a legitimate objective, however I usually ask them to tell me what percentage of revenue they get to keep after they make a sale BEFORE we start worrying about additional leads?


There are two ways to make a profit running a business:

Option 1:  Increase revenues by closing more clients, raising your prices and getting your clients to buy more products or services from you.

Option 2: Cutting costs in your business.  Less money out, means more money in your pocket.

Which of these two efforts do you think you have more control over?

Because if you picked Option 1, we need to talk! 

Yes, of course a profitable business must have customers, must sell as much as possible to them and must continue to add new customers.  But the amount of work involved in all of these activities is far, far more difficult and also far less in your direct control.

Example:  You can meet a lead.  They can want your product or service — actually NEED IT.  You can make them a great proposal.  And then they can go with another vendor…  That ever happen to you?

If it happens more than 50% of the time, then we REALLY need to talk!

That said, Profit Margin is probably the aspect of your business that you have the MOST CONTROL over. 

Why you ask?

10 Critical Ways to Boost Your Profits

Let me show you:

1.  When was the last time YOU negotiated rates with all your service providers or subcontractors?

2.  How often do YOU bid out projects with service providers or vendors to balance getting the best rate possible with the best service possible for what you are paying?

3.  How often do YOU review your insurance rates and your utility rates?

4. If YOU have employees, how frequently do you review their performance against goals?  Or do you just continue to pay them regardless of their performance.

5. Have a lease plan for office equipment and technology?  How often do YOU renegotiate those plans to get newer equipment at a better rate for the product and for your service plan.

6.  When was the last time YOU really did tax planning with your accountant?  Or do you just send him your Quickbooks files at the end of the year and just pay what they tell you?

7.  Speaking of Quickbooks, how often do YOU review your Profit/Loss statements, your balance sheets.  Do you compare year-to-year actuals between last year and this year on a monthly basis?

8.  How often do YOU review your accounts receivable to determine which of your customers or clients are routinely late in paying you — and what do you do about it when you find that there are repeat offenders.  If you said, “nothing” then you are letting your clients walk all over YOU!

9.  YOU network at dozens of different organization events — chambers, special networking groups, other business organizations — when did you really talk with a service provider in the room to see if they could do a better job than your current provider?

10. Speaking of all those networking activities, have YOU ever done a cost-benefit analysis on which ones have generated business for you, or at least warm leads, as opposed to those which have had no direct, positive impact on your business?

These are just ten key examples, but note that the most prominent word in all of them is the word “YOU”!

Just a little bit of effort by YOU, can result in hundreds if not thousands of dollars a month in savings, which means you get to keep more of the revenue that you generate.  This gives you more breathing room, if some of your customers are late making payments.

Even more importantly, why spend more money for products and services than you really need to?

That’s simply a waste of money.

Hey, we all make choices and you may pay more to a “Strategic Alliance” for goods or services because they send business your way.  But shouldn’t you at least KNOW how much that additional business is worth and factor it into your decision making when deciding to stay with a vendor or move on?

Here’s another big jolt.

Not all of your products or services have the same profit margin!

Do you really know that?

Or do you just sorta know that might be the case?

Because, what’s the point of working your butt off to sell something that has a lower rate of return when you could be selling LESS of another product or service and actually be making more money?  I’ve dropped that 220 volt power line on a couple of my clients and their hair is still standing on end.

Even small changes in your Profit Margin can make big differences in the net profitability of your business.  So don’t leave these things to chance.


At no cost to you, I will spend 2 hours working with you to really understand the true profitability of your business.  Just call me at 203-727-7868.  Let me show you how to make more money, keep more of it and work less to do it, so you can have a better lifestyle and less stress in your life.

As a former senior Marketing and Public Relations executive with a Fortune 10 company, I am now a certified business coach with Westport-based Next Level Strategies (an ActionCOACH firm), a business coaching network.

Better yet, how about schedule a free 30 minute phone consultation with an experienced business consulting firm that can generate results for you and your business?

Simply click on the link to schedule your call today…

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