Step 1 to becoming more profitable25th July 2018
Over the past few weeks, we’ve been talking about one of the fastest ways to grow your business.
The fact is that you cannot simply rely on one line in your accounts, telling you how profitable you are.
You need a much more detailed breakdown of which parts of your business are profitable, and which are not.
By understanding where the profit lies in your business, you can focus your attention on the parts where the money lies – and drop or tweak the parts which are holding you back.
It sounds simple, right?
As if all you need to do is take a closer look at your accounts, to uncover the gems hidden inside?
Unfortunately, that’s not the case for most businesses.
The problem is that you’re probably not collecting the data you need to measure this, in the first place.
And if you don’t have this information, it’s impossible to see where your next stage of growth will come from.
Case in point:
A client of ours helps other companies with health and safety*. As part of their offering, they deliver training days. They have a mixture of different course topics, delivered face-to-face and digitally, plus the courses can take place in different locations, including their clients’ sites.
When this company started working with us, they knew they were profitable – but were very unclear about whether there was any difference in the profitability of their various trainings.
The problem was that they had very little data to go on. They could tell that certain course categories were more profitable than others. And it was clear that courses delivered online were cheapest to run.
But the business was more complex than that.
After clarifying the business model, we started collecting more data about how much each individual course performed – instead of bunching them into categories.
We also collected data about how each location performed in terms of sales, and how much they cost to run.
This gave an entirely new perspective on the business.
Now, our client could instantly see the difference between the most and least profitable courses – and it had absolutely nothing to do with what was being taught.
It was all to do with location – where the training was being delivered.
Some locations were much more expensive to run than others.
With this data in hand, the company could now change the location where some courses were delivered, and charge three times as much for the locations which were not profitable. Some products were converted from face-to-face to digital delivery and profit went up.
What’s more: They now had a system in place that gathered this data for them, leaving them with an ongoing stream of insight that help them track profitability long-term, and make smart decisions for growth.
What would insight like this do for your company?
Are you collecting the data you need to measure where the profit lies in your business?
If not, that’s the first step you need to take to become more profitable.
Just hit ‘reply’, and let’s get that data for you. Then we’ll show you how to use it to grow your company from £1 million or £2 million to £5 million turnover, and beyond.
*Note – some identifying details have been changed.