Which products or services are hurting your company?18th July 2018
Stacey looked at the accounts and scratched her head in confusion.
“But….. We’re profitable! Surely all we have to do to grow is more of the same…..?”
Stacey was a savvy businesswoman. She couldn’t have grown her aesthetic clinic to £2 million turnover without being interested in her numbers.
And she was ambitious, too. Her business had reached a critical point and she wanted to double it.
Since things seemed to be going well, she assumed that all she needed to do was scale her existing business model and see turnover grow.
The problem was that her accounts were leading her in the wrong direction.
When we sat down to analyse the accounts, it was clear that many critical figures were missing.
Sure, the company was profitable overall……. but which services were bringing the money in, and which ones were lagging behind? It seemed unlikely that all parts of the business were equally profitable.
This is the detail I see most business owners miss.
When your business reaches a certain level, the bottom line isn’t enough. Understanding how profitable each part of your business is critical – the devil really is in the detail.
Digging into the numbers, you may find your best-selling product makes the least amount of profit. Or that one of the product lines you’d barely paid attention to is actually a gem in terms of margins.
This will show you which areas of your business to develop, and which to tweak or abandon altogether. There’s no point, after all, growing the weaker parts of your business – and you will grow much faster if you focus on the stronger parts.
You can never achieve this insight if all you have is one number representing overall profit.
In Stacey’s case, it was clear that promoting facial treatments wouldn’t help the company grow – even though there was lots of repeat business, margins were low, and those patients did not necessarily “graduate” onto more expensive treatments.
By breaking down profitability for all parts of her company, she was now in a position to make an informed decision – change the pricing model for basic facial treatments, or cut the service out altogether, focusing instead on higher-impact treatments.
How clear are you on which parts of your business are most profitable? Does your accountant offer you this breakdown?
If you’re ready to accelerate growth in your company by developing a deeper understanding of where your real profit lies, hit reply and let’s talk.
We can help you look at your figures, and understand where to focus your efforts so you grow much faster.
I know you’ll take clarity over confusion any day of the week!