Growing profit is normally one of the principal goals of a for-profit business.
There is a lot of material in Smorgasbord that will assist with this goal.
However, one of our fundamental objectives in Smorgasbord is to "distill out business wisdom" to save you the huge effort necessary to get your mind across all the various reading materials on the subject of profit maximisation.
Turbocharger is our special topic distillation of business wisdom on how to grow profits to save you a lot of learning effort and allow you to divert that time to directly focus on profit creation in your business.
We have to say at the outset that every business will be different so any advice here is general in nature and should only be relied upon to craft your own approach to profit improvement. Always get appropriate professional advice for the detailed aspects of your pathway to profit.
We are nothing if not ambitious here. We aim to demonstrate how it might be possible to double your existing profit in 100 days then double it again in a year by increasing revenue!
We have developed an approach best represented in the following graphic.
It is basically a three step process:
- Work out your destination.
- Optimise what you have.
- Grow the business.
The balance of the material in the base of the pyramid above is the rest of Smorgasbord's Menus and specific business management subject matter.
When setting out on any journey, one has a destination in mind.
It should be the same for your journey towards your goal of increased profits.
The goal is probably fairly simple on the face oft it but there may be a number of details that you should consider around this overall goal.
They might include:
- Attitude to risk (see Risk Management article)
- How much debt you are willing to incur to finance growth.
- The common trade-off between surrendering some short term profit to fund the growth program in the expectation of more profit later on.
- Is the profitability meant to be used to position the business for sale as better profit will mean a better price usually. Profit often drops in the short term as funds are used to promote growth so your sale might be delayed or stop short of our stage 3 - growth.
- The energy levels of yourself and your team and therefore how hard you want to push the exercise.
- The size of your business - the speed of change will usually slow down as the number of staff increase. Their minds need to be won over to the exercise and they might have different agendas to yours.
- The attitude of your superiors (if you have any) and what they will expect and tolerate.
We have a range of articles on goal setting that you can see grouped together in Goal Setting Recipe
We argue that before you try to grow your business in order to grow your profit, it makes a lot of sense to "tune" it to be operating as efficiently as possible.
If your business has any age or complexity, it will most likely have developed some less productive 'barnacles' on its operation and have a number of 'leftovers' from earlier profit drives.
Many of these will be absorbing money, management attention and probably morale.
Rather than them hanging around and diverting energy, our first step is to prune out resource wasters.
Related to that is the value of getting yourself and your team as efficient as possible so as to be able to focus on the profit drive.
We group our recommendations for this optimisation process in our Menu Double your Profit in 100 Days.
3. Go for Growth
Having tuned the engine of your business, now is the time to go for growth at the speed and direction you determined in the first (Destination) step of this process.
Going for Growth is a big topic because there are many forces and techniques that can be brought to bear.
We start out with a Menu that is really a Menu of Menus because of the huge subject area to cover. See the Double your Revenue in a Year Menu.
All that really remains is for you to start!
We are here to help so please provide feedback on where we can flesh out our offerings.
Also try the Q&A and comment tools on this site to see if others can help you.