Machen MacDonald: Don’t get lost in the business triangle
There are two primary reasons a person starts a business. First, they are passionate and good at what they do. Second, they want it to make money to provide a comfortable living for themselves and their family.
Many small business owners start their business because they were a good technician working for someone else and they wanted more autonomy and ability to make decisions to affect their future.
Successfully running a business is not just about being a good technician. That’s just the ticket to get on the ride. There is so much more to running a business than just providing a good service.
Questions to answer are: How will we market to get new clients? How much will we charge and remain competitive? How will we attract, train, and retain good employees? The list goes on.
When it comes to navigating our business to generate more revenue think of the business triangle. There are three primary ways to grow business profits. There are other strategies for sure. Most boil down to the following:
Offer more products and services
Increase the frequency of customer purchases
Going into business for yourself
Many new business owners make the mistakes of thinking they can charge what their competitors charge or maybe even undercut them and expect to be profitable. That is a mistake.
You must consider every dollar that comes into the cash register is not actually yours to keep. There are taxes, operational expenses, and many other costs of doing business.
Often times a business owner makes the mistake of not taking a salary or profit first and paying everything and everyone else first. The problem with that is there is nothing left over for the exact reason they got into business.
Consider paying yourself first and then being prudent and diligent to pay remaining expense with what is left over. The quicker you realize for every dollar you have coming in there is only about 80 cents to cover the expenses associated with running the business you will get more creative and less likely to squander money under the hallucination of it’s a business expense or write off.
To increase money available for expenses consider increasing your prices by offering more perceived value. Find out what your ideal clients really want and are willing to pay for. Provide that to them.
Consider what are other ancillary products or services that your ideal client that typically buys or wants to buy and offer it. Finally, find ways to incent your clients and customers to purchase your products or services one more time than they normally would throughout the course of the month or year.
Most small business owners are not great about increasing their prices to keep pace with inflation and increasing operational costs. Now is a good time to start getting caught up.
Imagine increasing the price of a $100 service by 5 percent and offering an additional product that costs $25 and then reminding the client to buy and enjoy the service one more time over the course of a year.
By doing so an additional $130 was generated that otherwise would not have been. This 130 percent increase in revenue is simply by expanding the business triangle above. Now multiply that over 25 percent of your client base since not everybody will buy your new offers. That is still very inviting to explore.
As mentioned above, there are many other strategies to increase revenues and reduce expenses. For now, work on expanding your triangle.
Make it up, make it fun, and get it done!
#1 bestselling author Machen P. MacDonald, CPCC, CCSC is a certified life and business coach with ProBrilliance Leadership Institute in Grass Valley. He helps business people gain more confidence and clarity to live their ideal life. He can be reached at email@example.com and 530-273-8000.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.