Sales is vanity, profit is the king.
Because you can make a ton of sales and still be left with no profit to take home.
That’s why you should keep this formula close to your heart.
Knowing this formula is not enough, you got to use it in your business to increase profits.
So if you want to maximize profits in your business you have to increase sales and marketing ROI, reduce costs, expenses and tax; and implement smart systems.
Today I am going to share a total of 47 ideas that you can use to do it.
These ideas are organized across following six variables:
All these affect profits.
This is an in-depth piece so take a deep breath, pick your cup of coffee and savour both the coffee and all the ideas that I have shared here.
World’s best idea or knowledge won’t do much for you unless you take action so to get the best value from this piece read through 3-4 ideas and pick the one you want to apply right away. You are spoilt for choice because every idea shared helps you grow profit 🙂
So, pick the one you want to apply NOW and apply it to see an uptick in your profits. Almost instantly, with some ideas.
Come back later to read the rest and apply one by one. And, in no time, you see your profits growing without a lot of effort.
You may even be surprised why you didn’t realize it earlier and did it already.
Know that these are powerful ideas. These are the same ideas that I have used myself and also helped my clients apply in their business to grow their profits without a ton of effort.
Without further ado, let’s dive in.
Are you struggling to get new sales?
Probably because you are chasing new clients all the time and overlooking an asset that can get you new sales at a fraction of the effort.
What is this asset?
They are your existing clients and you can sell more to them because they already know, like and trust you. That’s the reason they bought something from you in the first place.
One of the ways that you can sell more to the existing clients is by offering products which they frequently buy, and thereby increase the frequency of sales.
So if you go to your accounting dashboard and check out the summary of sales by product type, you will see the list of products that you sell. Maybe it’s a physical product that you sell that someone needs to buy every two weeks. In case you run an online business like coaching or online education, you can create a premium community and offer monthly membership.
This is the model a lot of subscription-based startups that sell you a monthly pack of toiletries, beauty products or weekly supply of fresh ingredients, to sell a ton and get sky-high valuations.
So you want to get in front of your existing customers and offer exactly what they need and when they need that.
It is much better than trying to find new customers and pitching them on your product. It’s powerful for growing your profit because there is no cost of acquiring a customer when you sell to existing customers because you don’t need to invest in marketing.
This is what I call an uber profitable approach sale.
Let’s say a customer who already trusts you and your brand decides to buy a workshop from you. The next smart thing you can which is a win-win for both the customer and you is to offer something which is a natural extension of your workshop. Like a monthly accountability and coaching call to make sure that the customer implements what you teach in the workshop. You can also sell a related program. Prompt for such sales should be done as soon as the customer completes the first purchase.
You can also offer an advanced workshop at the end of the first workshop.
Many of these customers who you offer add-on products are likely to say yes because they’re already in the buying mode. You’ll get all these additional sales without incurring further advertising or marketing costs. This also means higher profit margins because your cost of customer acquisition remains the same for someone who buys the only one product and for someone who buys more than one product just because you prompted them to do it.
To implement it in your business go to your accounting system. Then look at all the products or services that you sell. Make a list of all these items. In case you have only a few items to sell then you can list all these items without even looking at the dashboard.
Now create a value ladder. List the products most customers start with, next to them list the product the customer is most likely to get value from and buy. One by one list all the products you can, in a logical sequence that allows your customers to get maximum value, and allows you to serve them the best.
Now set up systems and processes that allow you to sell the next logical product in a sequence to anyone who buys from you. It’s one of the most natural ways to get people to buy from you and increase your profits.
Do you remember the profit formula I shared above?
Sales minus cost minus expense minus tax equals profit.
There are many ways you can work this for your advantage.
One of them is to identify customers that come to you naturally to you so that you don’t have to spend much on marketing. This way your cost per acquisition is less. The money you save on acquisition is money that directly goes to your bottom line.
To increase such profitable customers check the channel where most of such customers come from and double down on growing that channel. As a result, you will increase your profits much faster than when such customers constitute a smaller part of your customer base.
Most entrepreneurs want too much sales too soon.
They want to sell their costliest products to new customers and without taking the time to build a connection and trust with them first.
This is a short term approach because you may get some sales like this, but your cost of acquisition will be high and you will not sell a lot. You’ll see a double squeeze on profits because of less volume and low margins.
Better think long term.
Instead of how much you can now focus on what revenue you will get from your customer over a 6-36 months horizon.
Your customer may not trust you enough to buy a £1000 product but they may be fine with giving you or your business a chance by buying a £7 product.
Such a product that allows customers to experience your brand by spending a small amount is called a tripwire. A tripwire product is a low hanging fruit. Once customers use your tripwire and get to know, like and trust you, you can introduce them to your core product, and then to your profit maximizers.
So you could have three levels of offerings – a tripwire, core product and profit maximizer all stacked next to each other to help you increase lifetime value of your customers.
If you sell a program or workshop or something for £100. And, the cost of making the sale (spent in marketing or buying traffic) is £50. The cost of delivery is also £50. Then you just reach breakeven and don’t get any profit.
If you are in a situation like this, you might think that you’ve put in a lot of effort for nothing because you didn’t make any profit. That kind of thinking is focused on the short term. But the profit is in the long term.
If you think long term, you will build something that I call the trust currency. Through this kind of sale you start accumulating this currency. So, in the beginning you don’t earn profits but you earn the trust and that helps you earn more profits in the long run.
Though you do not make any immediate profit you give your chance to your customer to know you and experience your product. Knowing is a prerequisite for liking (even loving) and trusting someone. When your customers like and trust they are primed to take bigger risks and pay you more. And, if you deliver on the promise you make then customers won’t think twice before buying a signature product from you, given they have a budget and a real need.
And, even when the customers who buy your tripwire don’t generate profits or buy later, many of them can give testimonials. And, you can leverage these testimonials to make bigger sales to those who are on the fringe.
In the longer run, and even in the medium term, when you wait before pushing a high-value product and instead win customer trust with a low price product, you sell more and make more profit.
Think of your clients. What problems do you solve for them?
Let’s say that you are a marketing coach specializing in funnels. You know funnels really well but you are not an expert in Facebook ads. But you know that your customers need help with funnels as well as with Facebook ads to grow their business.
In such a scenario you could bring in an expert Mr. X who is an expert at Facebook ads. And, you can go to your customers, and tell them that Mr. X is a Facebook ads expert and I trust him for the results he can get you because I have worked with him in the past, and hey can feel confident in getting Facebook ads help from him.
If your audience trusts you enough then buying from who you recommend will be simple. This way you will be able to serve your audience, as they will get the solution they need without going elsewhere. And you will also be able to generate profits from this partnership without needing to execute the Facebook ads on your own or without burdening your team.
Remember, you’re not in the business to make sales. You’re in the business to make a profit.
Warren Buffet said this about Bill Gates in one of his interviews:
“Right after we met, us a group of about 20, were asked to write down on the sheet of paper one word that they thought accounted for their success. Bill and I maybe only had met twice didn’t know what the other one was writing down we both wrote down the same word which was focused and he was focused on software I was focused on investments…”
Being focused is powerful.
And, as a business owner, you want to be focusing on your most profitable products.
Because you need profits to build a sustainable business. If you’re not making a profit, your business will not last regardless of making the sale because sales is just vanity, it doesn’t mean anything if you’re not making a profit.
So the focus should always be on profit.
I remember one of my clients, who works in the dental industry and started working with me a few months ago. He had five or six types of services including hygiene, teeth whitening, mouth, oral surgery, dental implant, and smile makeover.
His focus had always been on high-end products like dental implants where you get £20- 30,000 pounds, per case. When we looked at profit margins they were not the highest for that service.
When I showed him this and recommended that he focus on high margin products, he was surprised. Based on the recommendation he started focusing on the most profitable products. His profits jumped up by 29% in the last quarter.
To apply this in your business, go through your accounting system and check your sales by products. Then work out the cost of delivery or cost of the fulfillment of whatever promise you make. Now see what the margins are and list the percentage. That percentage of margins should help you choose which products you should be focusing on, the ones that would help you to make more profit in your business.
I was on a call recently with my accountability partner. She is a top 1% divorce lawyer in the USA. She specializes in divorce negotiation. Divorce is so nasty in terms of finances, family and personal life that is why negotiation in the divorce is very important. She has built a ton of content and authority around this topic and serves a customer segment that is highly profitable.
On our call, we started talking about business growth. I asked her, “Hey, you do divorce negotiations? So how about you also extend your expertise to negotiate when people are going through a business divorce? Because when a business partnership ends shareholders stop talking with each other and they don’t want to work together.”
She got the point. Because she can use her existing expertise in helping shareholders come out of that situation, and help transition to a place of win-win for all involved.
You can do the same in your business and deploy your existing expertise to help a new customer segment that you can serve. It grows your business and with it your profits.
Some time back I received an email from a person that I had subscribed to a few months ago. In that email, he was offering his course at half the price for a limited time. His course fee is $997. Let’s call it $1000. He offered the same course for around $500.
I may buy the course to save some money and maybe I’ll get value from it.
But I am putting myself in his place. If I buy the course at a discounted price, he would lose out on an opportunity to earn $500 on that sale and grow profits.
You see I am not a big fan of offering discounts. A better approach IMHO is offering a bonus instead.
Instead of saying, “Hey, I’m going to offer you a 50% discount or a 30% discount”, what if you offered something extra?
With this extra offer, you are making sure that you are not losing out the regular profit and keeping it with you.
For the person selling the course, he can offer a weekly coaching call or a 1-on-1 meeting to his customers. This will give added value to the customers, and allow the seller to understand his customers better.
There is more to it, with these insights and value a customer gains through the bonus they can see faster results than usual which will prompt many of them to buy more from you. And, this virtuous cycle of profit growth continues because these you don’t need to spend more to get them to buy again.
So, stay away from discounts. Offer personalized bonus to gain customer intelligence and build trust with customers. And, keep your price and profits intact.
What’s the average conversion rate in your business?
For example, when you talk 1-on-1 with your ideal prospects then what percentage you convert into your paying clients?
If your conversion rate is high it means your price is low.
How do you know what is high or low? Use your understanding of your space, and industry benchmarks to figure this out. Asking fellow business owners who are ahead of you in the journey also helps.
If you realize your price is low then don’t be scared when increasing the price because the price is just an arbitrary number.
How do you come up with a price anyway?
When setting a price, the amount the prospect is willing to pay is the only thing that matters. So you don’t come up with your price, your prospect, they come up with a price based on the perceived value of what you offer.
They will pay more for your services based on this value.
To understand it better look at cars. Ferrari and Honda. The perceived value is already established there. You won’t walk into a Ferrari dealership with £10,000 in your pocket to buy it. But £10,000 is good to buy a Honda.
So, to grow your profits increase the perceived value of what you sell and increase prices.
When was the last time you reviewed the pricing structure for your products?
If you haven’t done it for a while, it might be a good idea to do it now. You may discover that just because some products are your best sellers that doesn’t mean that they are the most profitable ones too.
The idea of running a business is to make a profit, and not to sell more. Yes, selling more can help make us more profit. But that’s not definitive. What if the margins are low. You might be selling 10 products for £100 each. That’s £1000. Your cost of sales may be £50 for each product. So, you make a profit of £500 in such a sale.
What if you have another product that sells for £400 but costs only £100 for delivery. That means £300 profit on each sale.
Now you know that £400 product helps you save more. Should you ditch your popular product and invest all your energy into selling this product?
That won’t be smart because popular products are popular for a reason. Continue selling them the way you do but make an effort to sell more of £400 products than you do now.
To find such opportunities for profit growth in your business review the margins for your products and try and sell more of the products with high margins.
This one is super easy to implement.
For example, if you run a coaching business and have a membership community for your customers, and there are some members who are whining and complaining all the time. With their attitude they derail your thought process, don’t let you concentrate and be in your zone of genius. It’s affecting you and the other members of the community.
The best thing in such a situation is to fire that member. Reach out to them and say, “Hey, here’s your money back. I wish you all the best.”
You use the energy that you release through this firing to court new business, figure out how to make a profit in business and grow it like you are doing now.
You also save your community. And, you’re only left with like-minded people who take action, and who believe in what you do. You get to work with people who trust you. These are the kind of customers you want in your business.
Because they trust you, they’ll use what you sell and many of them will become your brand ambassadors. They’ll be vocal about what you do, talk to their tribe and amplify your message to create a new wave of growth and profit.
This might be more useful for businesses that hold physical inventory.
Do you know how much stock you are holding in your business?
You should if you don’t know it already.
Because if you are holding too much stock, then you are paying for it even when you are not using it. This affects your cash flow. Wouldn’t you rather have cash in your business bank account than stock because you can reinvest that cash for growing your profits?
Also if you hold too much stock, more than you need, it may become obsolete or reduce in value in the future. This happens a lot in electronics and the fast fashion industry.
Dell became a powerhouse several decades ago by reducing its stock to super-low levels. That became a big competitive advantage in an industry where technology was changing really fast.
Bill Breen, the senior editor of the business monthly Fast Company, wrote in his 2004 piece titled Living in Dell Time:
“Eleven years ago, Dell carried 20 to 25 days of inventory in a sprawling network of warehouses. Today, it has no warehouses. And though it assembles nearly 80,000 computers every 24 hours, it carries no more than two hours of inventory in its factories and a maximum of just 72 hours across its entire operation.”
You can follow this same model in today’s world and win.
If you don’t, you’ll have to account for the reduced value of stocks on your balance sheet and that will take your profit down. You won’t want that.
You’d want to keep an eye on the level of stocks in your business. If you have been in business for more than a year, you’ll know how many units you are selling on a weekly, monthly basis.
Buy based on that insight. That way you’ll control your cash flow and the level of risk associated with a write-down of stock.
Decide a routine for the stock check, as per the size of your business. If you run a small business then a monthly stock check is good. For bigger businesses, do it every week. And if your business is huge, you may have to do it daily. Based on your stock position, you can reduce or increase your order size.
You can use the cash you have in your account, because of not paying for unused stock, to make more profits.
When you write an email or run a Facebook ad, you can touch a lot of people at once.
When you speak on stages, you increase your influence among a lot of people. You can create a bigger impact than you would if you shared the same ideas 1-on-1.
When you have influence and make an impact, people want to buy from you.
The skills that allow you to do all the above like copywriting, digital marketing and public speaking are high-income skills. As an entrepreneur, you should focus on developing at least one high-income skill.
Dan Lok recommends developing high-income skills as part of his wealth triangle approach.
He shares how you develop a high-income skill, build a scalable business and wrap it up with a high return on investment.
High-Income Skills allow you to make money, the scalable business is a low maintenance business that also makes you money, and high-return investments build your net worth. That works because it allows you to create a balance among income sources.
Having high-income skills also because you can deploy it in your business to grow sales. In addition, you can teach your high-income skills to a group of people and increase your profits.
High-Income Skills allow you to make money, the scalable business is a low maintenance business that also makes you money, and high-return investments build your net worth. That works because it allows you to create a balance among income sources.
Having high-income skills also because you can deploy it in your business to grow sales. In addition, you can teach your high-income skills to a group of people and increase your profits.
What are high achievers skills (HAS)?
Hiring, delegation, and negotiation are all high achievers skills (HAS).
When you have high achievers skills, then you don’t look at your performance and profit and loss statement or how much sales or profit you make. You look at everything from a reverse engineering point of view.
Let’s say that you are someone with high achievers skills. You are doing a business of £500,000 and now want to do £1,000,000. Because you are a HAS person, you’ll look at a £1,000,000 business and deconstruct the model.
You’ll ask yourself,
You’ll gather all these details and create a step by step plan to go to £1,000,000 from £500,000, and rally your entire team around it.
A lot of people can go from 500,000 to 1 million over a period of time but someone with high achievers skills can go it in half the time.
So If the normal time frame for this kind of growth is 2 years. Then as a person with HAS, you can do it in 1 year. I am sure there will be some incremental costs related to growth. If you keep them in check, then you win because you’ll save big on the employee salaries and related costs because with the usual approach they’ll need to work an extra year to achieve the same revenue.
It takes money to make money.
And there are times when you have spare cash in your business and you’re not earning any interest on it. It’s just lying there in your account.
Can you use it to make more money than usual? Yes, you can.
If you know you are covered for the next three or six months, you can strike a deal with the suppliers.
This works best when you are buying constantly from your suppliers like when you have a brick and mortar business where inventory moves fast.
In such a scenario, you can reach out to your supplier to strike a deal and say, “Hey, I know, the payment on your invoice is due after 30 days of receipt of the invoice. How about I pay you within the next seven days from the date of your invoice. And, in lieu of that, I get an X% discount, which we can call ‘early payment discount’.”
It’s a no-brainer for suppliers to accept because they know that in the usual scenario they’ll be getting their money in 30 days and if they choose to offer an early payment discount they will get it in 7 days instead. A full 3-weeks early. They can use that fund to do anything they want.
Besides they would have their markup so it is easy to get them to offer a 2.5-3% early payment discount.
Using this same approach, one of my clients who runs a £6 million a year business saved £48,327.16 last year (yes I looked that up while prepping for this guide). Just by paying his suppliers early and getting an early payment discount. This saving, like savings from any other source, goes straight to your bottom line as profit.
In 2006 I was working for this top accounting firm based in London. The business was structured in such a way that we, the accountants, were considered a profit center. This meant that every client that we were dealing with paid to manage their business and we got paid. We were the ones generating the revenue, so we were the profit centers. And the firm treated us as such.
With this approach, only the best performers stayed with the firm.
In other businesses, I’ve seen that when they hire someone to work for them, they don’t see them as a profit center, only as a new employee or a consultant. They necessarily do not hire someone who is the best but only people who can do the job and don’t cost much.
It is ok when the job in question in manual work, but when you are hiring a person to do specialised work like customer service, sales, marketing or a financial advisory, then it makes sense to hire not the cheapest but someone who can handle more clients and keep them happy, or bring multiple of sales of an average salesperson or a consultant who devises a strategy for your business that shows real results in your business.
One of the ways that you can make more profit in your business is by spreading the cash outflow from your business. But you might say, “Shishir but you’re talking about mixing cash, with the cost.”
They’re not the same thing. This is not how it works. Let me explain.
When you spread the cash outflow and you have an equal amount of cash going out every single month, your Cash Flow Forecast becomes easy because you know exactly what your cash outflow will be in any given month.
You may say, “Shishir but what’s that got to do with the profit?”
Let’s say a supplier sent you an invoice for £7,500 last month. And this month, the same supplier billed you for £2,500. If you add up two months, the invoices are £10,000.
Here’s what you’re going to do in such a scenario. ask the supplier, “Hey supplier, this is a common scenario. For a few months in a year, you bill me £7-8,000, and there are months where you will bill £2-3,000. I have seen the average for the past 3 years and noticed that we do about £60,000 worth of business together every year. This comes to about £5,000 every month. How about I pay you £5,000 pounds a month? And then we will reconcile the balance every six months.”
The supplier may be thinking, “Oh this time, I should just get £7,500 but oh shit next month, I’d only be seeing £2500. Maybe I should take up the buyer on the offer and then I’ll get £5,000 every month for the next six months.”
It may take some convincing and reasoning on your part, to explain to your supplier, how it is helpful for your supplier to know in advance the money they are going to get every month.
If you are willing to make this effort, you’ll have a constant cash flow.
Back to your question about what it’s going to do with my profit?
Here’s the thing, when you have predictable cash in and outflow, you know what your cash position is going to be in three or six months down the line. When you know that you are more comfortable in planning capital expenditure without worrying whether a particular expense will make my cash position unstable.
When this cash flow is more predictable you can plan your marketing and growth investment without needing to stop them in a particular month. Any seasoned marketing expert will tell you that well planned, sustained marketing efforts will get you better results than spray and pray approach. So, with sustained marketing and growth efforts, you grow your sales and grow your profits
Negotiating (a trade discount with your suppliers) is one of the most important skills of all those you need to achieve profitability in your business.
So what is a trade discount?
As part of a trade discount, a business owner agrees to give X amount of business to a supplier in a year or a certain period and in exchange, the supplier offers a certain percentage off, of the invoice.
So from a supplier point of view, you guarantee them definite sales. In return, as a business owner you get a discounted price. So there is incentive for both parties to work together. To make it work, you just need to go to a supplier as ask them, “Hey if I give you X amount of business this year, what discount can you offer?
We did that exercise with one of my client’s client. As a result of that, he’ll be saving roughly around £27,000 this year. This goes straight to his bottom line.
Now go ahead and look into your financial reports. Check out the business you have done with your top three suppliers for each of the past three years.
Use this knowledge as leverage. Now, reach out to each of these suppliers and talk. Say something like, “I have been giving you X amount of business every year for the past three years. I need to offer a better deal to my customers because of increased competition. So If I give you 2.5% more business this year, what discount will you offer me?”
Trust me. So when you say you’ll give more business to them, they will offer you more discount and that goes straight to the bottom line. All you have to do is to, to work and then meet their target.
You can also make more profit in your business by continuously seeking better suppliers that can help you fulfill your promise to your customers.
If you have different sets of suppliers and you pay them different rates. Then talk with one or two key suppliers and ask them, “Hey, if I move all my business from other suppliers and give it you, what’s the rate are you going to offer me?” Naturally, they will agree to offer you a better rate because now they’ll get more business from you. You’ll have better terms and reduced cost. The money you save this way will go directly to your bottom line and you’ll see higher profits just by talking to your suppliers.
This is one of the main approaches that Walmart used to become the world’s largest company by revenue, with £393.90 billion in annual revenue in 2019.
Walmart founder Sam Walton’s primary focus was selling at low prices to get high volumes. He portrayed his lower profit margins as a crusade for the consumer. As his promise of “Everyday Low Prices” attracted a lot of customers and higher volumes year after year, he was able to find lower-cost suppliers than his competitors. He used this strategy to undercut them and to become first a prominent regional retail brand and later to become a national and global retail power.
Do you want to spend less than 10 hours a month managing finance in your business and still save £10,000 or more every year?
Then this idea is for you.
Most of my clients come to me with a variation of the following statement.
“Shishir, I am stuck in my business. I have tons of ideas to grow my business but never seem to have the time and spare money to implement them. A friend told me you helped them get out of such a situation. Can you help me too?”
Then, I tell them that I definitely can.
Because not so long ago, I was in the same situation that they are in today and I got out of it.
At that point, I had no time and a lot to do. I was the typical business owner, as Micheal Gerber describes in E-Myth Revisited, his classic book on the power of business systems. A business owner who worked all the time ‘IN’ his business but not ‘ON’ his business.
And, I learned the hard way how to get out of that situation.
You may be thinking – sure, I believe you, Shishir. But how do I actually save time and money by systemising my business as you told in the beginning? And, how does it grow my profits?
Let me explain.
By setting up accounting and finance systems, you reduce manual work and reliance on any one person for your accounting needs. So you save time and money both. With more time on your hands, you can implement all those ideas to grow the business that you wanted to implement for long but didn’t have time for.
The moment you start relying on systems, they do most of the heavy lifting and amazing things happen for you in terms of profitability. It also makes your business ready to scale to the next level.
Here is an idea that you can use to start (or move forward) with Systemising Your Business.
For your accounting system, you may be using online accounting software such as Xero or QuickBooks Online. With these, you can use a data extraction app like Receipt Bank or Auto Entry to feed in the invoices and receive them directly into your accounting system.
This single systemisation step in your business which takes no more than 30 minutes ends up freeing at least 3 hours every month. So, in a year you save 36 hours. That’s close to one workweek. You can use this time to work on growth, building more systems or simply enjoying your life.
With systems in place, there is hardly any manual input required to do the day to day bookkeeping work. In addition to saving money and time, you’ll also have information on a real-time basis.
I helped a long-standing client systemize his business back in 2014. He saved £60,000 that year. Since then he has been saving that amount every year. We are in 2020 now, and over the past 6 years, he has saved £360,000 in all. You can see the related case study below.
Another client, a business doing roughly £500k a year, started saving £227 a month (equivalent to £2724 in a year). I believe that every drop counts when it comes to savings and profits. And, this money went straight to the bottom line of that business and increased their monthly profit. It is a win in my book. What do you think?
Another business with £1.2m in annual revenues began saving £755 a month (that’s £9060 in a year) when we first implemented it.
What if you could do it and see the same kind of profitability in your business.
Imagine the impact when you save and use this increased profit to grow further by spending on the right marketing channels.
Don’t think of investing 10-20 hours upfront to do it. Start with 1 hour, and do what I shared.
WeWork lost £1.6 billion on £1.8 billion in revenue in 2019. If not for funding, they wouldn’t survive.
I have seen many businesses go down this way because they did not have funding like Just Eat and Deliveroo. You can avoid this fate. Want to know how? Keep reading!
On November 6, 2019, SoftBank Group reported a £7 billion in write-downs on its investments in WeWork. This amount was approximately 90% of the £7.8 billion SoftBank invested in WeWork over the past few years.
Only a couple of months earlier the analysts were hailing it to be one of the biggest IPOs of recent times.
What went wrong?
A lot, but a big part of it was unchecked expenditures. And, it might have something to do with EGO because ego dictates expenditure.
When you see your competitor doing really well and posting about the conferences they go to and people they hang out with on social media, you feel like you have to do the same in your business to match up and to make sure that you don’t lose out on attention.
In such times your ego and emotions take over, and your logical self steps aside. Instead of your goals, your reality, and your priorities, outside influences start dictating your actions. That is when you spend your money where you don’t have to.
More than the current success of your competitor or another business, you should see the steps they take to reach where they are. And, and if their finances are public see if the profits are fuelling their expenses or the investor money. Remember, all that glitters is not gold.
The idea to keep your profits intact by not overspending what you already have in the bank.
When you cut your expenses you might want to deploy that money instantly on some other head. I’ll suggest waiting for a quarter and adding more to your profits and then deciding whether you want to spend that money.
You don’t want to be the small business version of We Work.
To ensure this be wary of overspending. Be profit-focused at all times.
Schedule a regular profit check with your financial director to see and discuss how much profit are you making today compared to last year, last quarter and last month.
This is important even when you know your revenues are going up because expenditure can go out of hands in growing businesses.
So keep an eye out and keep spending in control. That’s all that matters.
If you are intrigued by the idea, then I’d recommend that you read “Profits Aren’t Everything, They’re the Only Thing” by George Cloutier.
It’s a profound book. Once you read it you’ll think more from a profit center point of view. You’ll know that you should not spend it based on your emotions or egos anymore. You’ll learn how to always think if a business spend is going to give you a return on investment and make more profit in your business.
This one behavior change can grow your profits almost instantly. Because when you see everything from the lens of value and ROI, you stop in your tracks before making random expenses.
See, how powerful it is?
Suppose, you want to buy a fancier printer than the one you have for your office. Now you’ll think if it will add value in proportion to the expense. Or, it might be a big capital expenditure that you are planning. With this new mindset, you’ll go the extra mile and explore different vendors before making that expenditure, when it is easy to be lazy because you have money in the bank. But won’t it be good if more of it remained in the bank, while your business got what it needed?
Keep exploring how you can get the same value by spending less. While you do that, be careful not to be Penny Wise, Pound Foolish. Maybe YOU do need the premium product but then hold on the other expenses until you have more money in the bank.
Do you want to add £1,400 to your profits in one hour?
I did it. I was bleeding money and didn’t even realize it until I did what I am going to share with you today.
So I was at an event last week. I met this entrepreneur. We got talking and started discussing profits. As we were talking, I asked her, “Tell me when was the last time you went through your bank statement and scrutinised all the expenses?”
She said, “Well Shishir, I haven’t done that in a long time. It’s not that I don’t want to do it. But I am too busy running the business.”
That’s why the No. 1 thing I tell business owners is to “Systemise their Business”.
Back to our conversation.
I wasn’t shocked by her reply. So many business owners don’t do this seemingly simple but impactful exercise which is getting rid of unnecessary expenses.
So I want you to go through your bank statement and find out the expense that you don’t need anymore in your business.
To qualify the item you want to get rid of, ask yourself these 2 questions,
Do I need this service or subscription at the moment?
Does this expense help me to grow profits in my business?
If you get a YES as an answer for both the questions then for sure keep it.
And if the answer is NO, then get rid of it because it’s an unnecessary expense that is pulling the profits down. Simple as that.
I do this exercise once a quarter. Last year alone I saved over £1,495 in subscriptions of the products I no longer needed. If I had not checked it, then I wouldn’t have realized that I was paying this much in unnecessary expenses.
I want you to save this money so that it can go to your bottom line.
So as soon as you finish reading it, schedule 30 minutes to go through all your bank statements. Look at the expenses, think about what you need and what you don’t. Scrutinize and get rid of what you don’t.
This way you’ll make your operations lean. Every pound and every dollar that you save adds to your profit. This is easy money that is yours for taking.
A decision that I made two years ago in Dec 2017 has made me £1,200 savings every single month, and a total of £30,000 so far.
At that point, I had an office at WeWork Chancery Lane, in London for which I paid £1,200 monthly rent. This amount covered repairs and maintenance and service charges. It seemed good for the value I was getting.
But when I thought this through I realized that whenever I had to communicate with my clients, I could just hop on a Zoom call, have a conversation with them, go through the business challenges, and answer whatever question they may have.
I could do the same with my team members. We could get inside Slack and discuss business. So there was no need for me to have an office.
Moreover, I had the realization that people buy from people. So, my clients didn’t really care about my location or whether I had an office. All that they care about is the solution to the problem they have, whether I can deliver this solution or not. As long as I can do that, they’re happy.
Think about the same for your business. And, see if you can move from the current model to an online model and save time on the commute, and the money that you’d spend on the commute, eating out, etc.
One of the biggest overhead expenses in a profit loss statement, which I call a performance statement, is the rental costs. They usually account for 25% of your total overhead expenses. It’s a huge expense.
I have already shared that you can go online and save most of these costs. But what if you can’t do without a physical presence?
This can happen if you sell hi-end luxury products, operate a space like an art gallery or a dental clinic where it is important for the buyer to experience something or get the solutions in a physical space. Or, when the customer wants to see and feel the product, and admire it before they buy the product.
So, you can do without a physical location. When I come across a scenario like this I ask my clients, “Hey, when was the last time you negotiated your rent with your landlord?” Most of them are like, “Well, I have a lease agreement. But I don’t negotiate.”
If you have been a good tenant, not negotiating with the landlord is like leaving money on the table.
That’s why negotiate with your landlord every year, or every two years because they would not want to lose a good tenant and go hunting for another one. But nothing happens until you ask because if you don’t ask, you don’t get it. That’s right. If you don’t ask, you don’t get it.
There is no harm in asking. The worst thing that can happen is that the landlord can say NO. Nothing to lose there.
One of my clients did that six months ago, and the result of that, now he’s saving £950 a month. That’s £11,400 more profit in his business without actually doing anything. It just took him 10 minutes of conversation with the landlord.
One of the biggest expenses in business is salary costs. In my experience, salary accounts for more than 25% of the overall expenses.
You can’t just go and reduce the salaries of people because then you won’t be able to attract the right talent. You can still save on salaries and add that as a profit to your bottom line.
You can do that by hiring a self-employed professional as a consultant, instead of hiring an employee. I’ll advise you to check the employment status/IR 35 with HM Revenue and Customs (HMRC) to see whether that person classifies as being self-employed to work with you or not.
By choosing a self-employed professional over an employee you save on employee National Insurance (NI) contributions or social contribution to HMRC. It’s currently at 13.8% so if someone is on salary of £30,000 pounds, then you get a savings of £4,140. And, you instantly set yourself to save over £4,000 pounds in a year. And, that’s just for one person. All this money saved adds to your profits.
One of the biggest mistakes that entrepreneurs make is they treat staff as the cost and as one of the biggest expenses in the business.
But if you do shift your mindset and see staff not as a cost but as an investment into the most expensive asset in your business. This mindset shift is important because let’s face it, without efficient people in your business, it will not perform. When you make this mental shift amazing things start to happen for you in terms of profitability.
In 2008, I was working for this accounting firm and my boss used to treat me as a profit center because I was working as an expert, who handled his clients. I was bringing revenue for him, for his business and he used to pay salaries to me.
Most businesses don’t work like this. When they hire a person, they look for someone who is hardworking, reliable, and honest. Often the mindset to hire a profitable employee is never there.
If you want to increase profits in your business, change the mindset and see the staff, not as a cost but an asset that can help you be more productive and who can sell on your behalf.
I was having dinner recently with my six-year-old daughter, Siyona. She was not finishing her dinner. I told her, “Siyona you got to finish your dinner it’s getting cold. She was like, “I don’t want dinner daddy.”
I told her, “If you finish your dinner, then I’ll take you to the toy store tomorrow.” She finished dinner in the next five minutes. You might be wondering, why am I telling you this?
Here’s the thing. The human brain works on the incentives and motives. It thinks if I do something now, what I’m going to get later on?
So, how I got my daughter to finish her dinner the same way you can incentivize your staff to do better work. It’s all about incentivizing your staff in the business.
So you give them a bonus an incentive. If the company as a whole meets the targets, everybody gets a bonus. But they also have individual targets and if they meet those targets they get extra commissions as well.
You can apply this in your business and tell your sales team that if they brought a specific sales number then they’ll get 5%, 10% or 15% commission. Set the percentage based on your margins and also on the impact of those numbers on your business.
Good salespeople are driven by the incentives and can do multiple times sales of regular salespeople. So, if you want a big spike in your sales number, pick a good salesperson and offer a good incentive and bonus structure.
As entrepreneurs, we should invest in ourselves and our business.
It would be wonderful to have an unlimited budget for such an investment. But that’s not the case. So, we need to choose and invest wisely.
Recently, there was this product that I really liked. I had gone through their webinar and realized that it would help me to move forward in my business. I noticed that the webinar offered a special price which was lower than what was listed on the website. But I also knew that at times they run a flash sale. I kept an eye out and lapped up the product at an even bigger discount than what was offered in the webinar.
This way I got what I wanted and would have bought anyway and got it at a fraction of what I had budgeted for this purchase. This way I kept money in the account.
Like I did, keep an eye out for services, products, and programs that you need to buy to move forward in your business.
If you follow the brand regularly you’ll notice when they offer a discounted price. You can also search when they offer such discounts earlier and if this is a regular feature and look at that time of the year. There are also annual trends like Cyber Monday and Black Friday when you can buy most products and services at a big discount.
I bought the product I referred to above for £500. In two weeks, I realized that I made a very good decision because the product helped me a lot in my business journey.
Think about what you need to buy to grow your business?
Because the best investment that you can ever make is in yourself. When you do that, you grow without needing to worry about the government and the economy. And, when you buy them by taking advantage of limited-time efforts, you’ll reduce your expenses and add to your profit.
As entrepreneurs we think a lot about today and about moving ahead in the future. But we forget to rethink past decisions in the light of new reality.
For example, you may have done a deal with a supplier for £60 per unit when you were buying 1000 units per month from them in 2016. Now your business has grown over the years, and you are buying 1600 units every month.
Shouldn’t you ask re-negotiate and ask for better prices?
Because it is fair to ask for a better price on bigger volumes.
In most cases it is enough to ask and your supplier will be happy to do it if they think doing business with you is profitable for them. So, your £60 per unit price can come down to £50.
When such a change happens your costs go down while your selling price and other expenses remain intact. So you save money that goes directly to your bottom line.
In such a sceneratio if the earlier procurement price was £96,000 a month, the new procurement price will be £80,000. That means an additional savings of £192,000 every year without any additional ongoing work, just by renegotiating prices.
Don’t hesitate in negotiating. This is an art that you develop when you practice it.
Definitely not when you are among the top 2-3 customers for the supplier. Because every business pays attention to their biggest customers, when they are doing £60,000 or £600,000 a year.
When negotiating, don’t go too hard. Be fair and see that the negotiated price is win-win.
Do you have an accountability partner?
If not, get one.
I get on a call with my accountability partner every two weeks. We set our intention for the next few weeks. We also share how well we did on the tasks we set out to do, and keep ourselves ‘accountable’.
There is another thing we discuss. It is profit growth. This is how this discussion panned out during one of our recent calls.
We are both entrepreneurs. We also speak on stages and host workshops. So on this recent call, we discussed the possibility of hosting a workshop together and sharing the cost. It was such a no-brainer that we both agreed to do it.
Not only will we reduce our expenses in hosting an event, but we’ll also be able to combine our audiences. My audiences will learn from what he’ll share and his audience will learn with me.
There are just two steps to implementing this. Get an accountability partner and then think of where you both can share costs.
You don’t have to be hosting a workshop like me, it can be anything that you do in your business like sharing office space or hiring one virtual assistant who works for both you and your accountability partner.
I read a story that eight months ago a lady stole around £500,000 from a business.
The three directors of that business had to mortgage their homes to keep the business afloat.
Nobody is immune from such theft and fraud. Unless you have systems in place to avoid this.
Those who steal may get caught later but by then the damage is done.
So, it is good to be proactive.
Here is the first thing you should do.
“Does the person who orders the procurement is the same person who pays for it?”
If you get YES as an answer change it immediately because if the same person is doing both there is a risk.
I’m not doubting the person here, but you gotta de-risk your business. To do that, spread the control in business from one person to two. One person orders and the other pays.
One of my clients learned the need to do it the hard way. Three years ago, one of their employees stole around £9,500 from the business. In their case, customers could pay by cash. And, the employee who stole was the one who was collecting cash and also had the responsibility of depositing cash. For several months she kept saying that money had been deposited in the bank, but It was never deposited.
To avoid such a situation apply what I shared above. Have two different people for purchase and payment.
To make it even more foolproof, have three people instead of two. One person buys, a different person makes payment and another one reconciles your business bank account. They can be outsourced partners or employees across three departments.
Why do top Manchester United players need a coach?
Why does a world-class athlete like Serena Williams need a coach? She is already the top player and has played at the highest level.
Why do Liverpool players, the top players who are winning the premier league, need Jürgen Klopp?
And, why does a top coach like Jürgen Klopp need 4-5 coaches like a goalkeeping coach or assistant coaches, to work with him?
Here is why – because we all have limited ability to see and think.
And, even top performers have these challenges even if their challenges are different from most people. When faced with such challenges, a coach shows them the path. He tells them, “Okay, this is where you are, this is where you want to go, this is how you can get there.”
And this is the job of a coach. But he does more.
He is with you every step of the way, and in case of financial coach, help you grow cash flow and maximize profits.
For example, you saw the profit formula on top of this page. Great idea but who helps you implement it in our business?
That’s where the financial coach comes in.
Often people say, “I already have an accountant who does all my taxes and helps me manage my finances. And whenever I have a question I ask him or her about it.”
But is there a problem with that?
It is similar to asking your babysitter what’s the best for your child? You wouldn’t do that. Would you?
Then why is it different in your business? More so when your business is your dream and your future. You grow it with your blood, sweat, and tears. Then why are you relying on your accountant to make all your financial decisions?
Robert Kiyosaki said:
“The word accounting comes from the word accountability. If you are going to be rich, you need to be accountable for your money.”
I believe that you can assign select tasks to your accountant but not all. Like Kiyosaki said to be accountable for your money, because it’s your money and your business. A financial coach helps you do that. He acts as a bridge.
So you have your bookkeeper, who does the day to day bookkeeping work. And, you have an accountant who files all the taxes at the year-end, but for the whole year. Financial coach does not do any of these and they are best done by an accountant and bookkeeper only.
A financial coach does something more important.
He helps you to navigate the money, in aggregate cash flow in your business.
Imagine that you’re driving on a racing track and have someone sitting beside you. Wearing a helmet, like a navigator, seeing a map and telling you where you need to go.
Remember the five stops through which money travels before it lands in your pocket. A financial coach can help you navigate through those stops and help you maximize the money that travels into your pocket, at every stop. At first stop, when you make sales; then when you pay your direct suppliers. And, at the next stop where you pay in indirect suppliers. Next when you pay corporation tax, the business tax, then the personal tax, leading to money in your pocket.
A financial coach guides you to go wherever you want to go fastest moneywise.
All 47 strategies that I am sharing here won’t matter if you don’t know how to implement them in your business. The financial coach helps you do that by telling where to start, which strategy to implement first, and what’s the path to follow?
I highly recommend you work with a financial coach for profit growth in your business.
After you’ve done all you can to increase sales and reduce expenses and costs, you should focus on minimizing your taxes.
One way you can do it is by using the right business structure.
There’s a difference in tax structure based on whether you operate as a freelancer a sole trader or a limited company. And, you should choose a structure that allows you to minimize taxes. That way you’ll have more in your bank account rather than HMRC’s bank count.
The structure you operate under depends on many variables like your personal income, whether you have different businesses and your level of income. I highly recommend that you speak to your accountant to get advice on this.
Do you know one in five businesses, don’t claim all possible business expenses that they incur?
This finding came through in research done by Free Agent, a popular accounting software in the UK.
It just means that just 20% of the business claims all possible expenses.
That’s strange because this means that 80% of businesses are leaving money on the table by not claiming all business expenses. It’s their money that is theirs to take but goes to the HMRC’s bank account.
And do you know that only 21% claim half of the expenses they incur? The worst part is that 10% of businesses hardly claim any expenses at all. That means these businesses pay taxes on all the income and profits.
They work so hard to sell what they make and to reduce costs and expenses. Maybe they are smart enough to systemize their business and focus on growing marketing ROI. But a good part of what they make, they let the govt take it in the form of taxes. After all this, they are left with a small pie for themselves. The feeling and having less than they could have may not be a good one.
There is a simple way out of it. Just speak to your accountant. Ask him if you are claiming all business expenses.
Don’t ignore it.
It’s a crucial last stop for businesses who sell to bring money in, pay suppliers, pay big corporation tax and business tax to the government. Then the entrepreneur has to pay personal or social security tax, also income tax. The money that remains after all this is what flows into your personal bank account. You must optimize for more of that money to go to your pocket.
I highly recommend you speak to your accountant and get info on different ways to minimize tax. To guide you, your accountant will take into account how much and when you’d be paying salaries. If you are eligible for a marriage allowance. This allowance lets you transfer a part of your Personal Allowance to your husband, wife or civil partner. This reduces the tax burden.
Your accountant will also consider pension contributions and the personal allowances if you’re on payroll or claimed the employment allowance.
Make sure that you have the right help and you are missing out on these savings that go straight to your bottom line.
Can too much business be a problem?
Yes, there can be a problem of plenty when it comes to your business.
When your problem is not that you don’t have clients but that you have ‘too many’ of them and not much profit to show for all those clients.
You might be ahead of those who don’t have many clients but you might still be lagging on the profit front.
Is that you?
Working long hours, working hard, always busy serving your long list of clients with no time for yourself?
You may be very happy because you equate the number of clients and busy-ness with success. And, that’s good.
But that happiness takes a dip when the month-end comes and you look at your profit. You look at the cash balance in your business bank account. And then you think, “Oh, actually I didn’t do as well as I thought I would, despite being busy serving my clients all the time.”
Have you experienced this kind of situation in your business?
If you have then you are not alone. And, all is not lost.
You can get out of this situation simply by focusing on your most profitable customer segment.
Let me tell you a quick story to explain what it is.
I was working with one of my clients who specializes in LinkedIn. Her expertise is using LinkedIn as a platform to grow your business. She has a wide range of clients ranging from accountants, coaches, consultants and brick and mortar businesses as well. This client base is a mix of genders and income brackets. There are clients who make £100,000, others do less than a million, and some over a million. So, she works with a wide range of customer segments and she’s constantly busy.
So, on a recent monthly call with her, I asked her, “What’s not working for you right now? She told me. “Shishir, I’m busy all the time. but I’m not making money in proportion to the time I am investing in my business.”
I told her, “We have only three resources – time, money and energy. That’s what we can give to our business, nothing else. And, these resources are not infinite so we need to be mindful of where we invest these resources. To build a profitable business we need to invest these resources in on customers who are most profitable for us.”
And, I asked her to find her most profitable segments.
And, you should do the same if your business is not generating profits even when you have clients and you are busy serving clients.
Your most profitable customer may be coming from a particular demographic, country, income bracket or gender.
Maybe you’ll make the maximum profit by selling to the accountants, lawyers, or marketing agency. Or maybe you need to work with property and event managers, or recruitment businesses.
So, here is the formula to identify your most profitable segment.
Your most profitable customer segment is the one that consumes the least resources (time, money and energy) and gives maximum results or maximum transformation for your client.
If there is a segment of clients where you could just spend five hours a month and deliver more impact to your client than another segment where it takes 8 hours to deliver the same impact then you know which is a better segment to go after.
And, the client for who you deliver impact and transformation will be happy and stick with you.
So, by choosing a segment where you can deliver more impact by investing less of your resources (time, money and energy), you’ll save resources. And your profit margins will increase. And, you can choose to reinvest these resources on your profitable segment. When you do that you create even more impact on those profitable customers. When that happens they are going to pay more. It will create a virtuous cycle of growth for you. And, you’ll have much higher profit margins than earlier and by investing a lot less time in your business.
For example, if you are a coach and you were earlier doing 20 coaching calls in a month. By focusing on a profitable customer segment you may just have to do 8 calls in a month. If you choose your profitable segment right, then you may end up making the same profits while investing only 40% of the time you spent earlier on the calls.
Imagine the impact you can make when you get your time back. It will be massive I guess.
Remember, as entrepreneurs, time is one thing that we don’t have enough of. So, identify your most profitable segment, win back your time back and grow your profits.
Your conversion rate is the percentage of people who buy from you, of all those who see your offer.
Usually, products with a low price point have a higher conversion as compared to those with a high price point.
Your conversion depends on diverse factors like your ability to get in front of the right audience, or how often the audience sees your offer, or how well you communicate the value of your offer.
These are not all the variables but these are among the important ones. So by getting in front of your audience when they are looking to buy, and using the right content, you can increase your conversions. You can go deep on this by taking help from an expert marketer and identify channel channels that get you the best conversion rate.
You can also evaluate competitors’ conversion strategies to use what is working for them and communicate what is unique about your offer.
The conversion process usually starts when a prospect comes to know about you. It may be through word of mouth or when they find your website or video through search or an ad. If your content is good it will make a good first impression and chances of them coming back to buy are good. But most of the users who read your blogs or watch your videos never come back. That is why you should ask people to subscribe to your updates. Then you should be consistent in getting your content in front of them.
Remember the rule of 7. As per this rule, a brand must make an average of 7 impressions on a prospect to make a sale. So, wait for 7 impressions through your content before pitching your product. You can use a variety of content for these impressions. Start with a blog post, and then show a content upgrade to get people to give you their email. Then send emails and share your videos.
Let’s say, 2 out of 10 people who walk into the door, who know you and visit your landing page or sales page or jump in the call with you, eventually buy from you. That’s 20% conversion. Now if you improve your conversion and take it to 30% without a considerable increase in costs then you can see an almost growth in profits.
Business is a marathon, not a sprint.
Even then, most entrepreneurs keep looking for quick ways to get rich. They are on a lookout for the next hack to become successful. They’re looking for the 89 keys in the piano. But the problem is the piano has only 88 keys. They suffer from shiny object syndrome. And, looking for something that does not exist.
There are some pragmatic entrepreneurs who know that marketing investments are useful for a business’s growth. They invest in PPC and Facebook ads to generate leads and sales to survive.
But even such entrepreneurs undermine the potential of organic traffic growth and SEO. The truth is that SEO is one of the best sources of traffic. On average, organic search leads have a 14.6% close rate, compared to 1.7% for outbound marketing leads.
If you don’t invest in SEO now you’ll have to start from zero from whenever you do. But if you start now in 9-12 months time you have an ever-growing source of high converting traffic.
Imagine a customer is in buying mode and they are looking for something similar to whatever you sell and your name comes up organically in search.
SEO powered growth approach works because people are already looking for answers on Google and YouTube. And when they come across your page, they are more likely to trust you because they found you.
And, you are not spending big budgets for brand awareness and lead acquisition so your cost per acquisition will come down and that will improve your profitability because you are gaining the customers without actually spending on an ad.
A football game goes on for 90 minutes. It’s not about the first five minutes, not the first 10 minutes. It doesn’t matter if your team scored five goals in the 10 minutes. What if the other team strikes back with six goals in the next 85 minutes, then you lose it. So, instead of looking at now, look at the long term and explore how you can build search rankings for your brand and set it up for consistent growth for years to come.
This is an extension to leveraging SEO.
SEO is crucial because you want to be keeping your cost of getting new customers as low as possible. This makes sure that your profitability is high.
SEO focuses on the long term but the traffic generated by SEO is not in your control. With SEO, you rely on Google or another search engine to send you traffic.
There is another method you can use to generate traffic at will. Where you have total control on the traffic you get. That’s the traffic you generate through paid search. You run ads on Google, Facebook, LinkedIn, and YouTube to drive traffic to your content.
These platforms use a bidding system, to decide whether to show your ads or a competitor’s ads to someone searching for information or products. The one who bids higher gets better placements, all other things like ad copy and visuals being equal.
If you have recently started SEO then it may be some time before you see results. So, use a part of your marketing budget to buy traffic, alongside SEO. Later when SEO starts giving your results you can also use the money you’ll save on marketing with SEO, to buy more traffic.
Now it is just a question of outbidding your competitors every time you run your campaigns. Be smart about placing your bids. Don’t place a bid for £20 if your competition is bidding £10 for a keyword. A bid of even 50p higher than your competition can put you above your them.
And when you have more traffic than your competition, you are bound to grow. Because you not only get new customers, you also get new ambassadors into your tribe, who bring even more customers to your doorstep.
This works great if you have your value ladder mapped out. You can make your first sale on a break-even basis and sell more to the same customer. So, you are first getting them in the door and then upselling to generate more cash.
Remember cash is energy. It’s the fuel in the business. With this paid traffic approach your control your cash flow and profits.
This 1-2 punch powered by SEO and paid traffic will put you in the lead and in a formidable position from where it will be difficult for competition to catch up.
I have so far covered traffic which is generated by SEO, you don’t have a lot of control on this another. I also covered traffic that you control and can generate at will by running paid campaigns.
There is another kind of traffic that you own. This is powered by your email subscribers.
So how do you get email subscribers? For this, you put out content regularly and build a rapport with the audience, and later you ask them to opt-in to receive updates from you.
These subscribers are your assets, who are eager to hear from you. So, when you launch courses, and if with them you help them move forward in the business journey, or move ahead in personal life, they many of them will buy from you because they already like and trust you.
You get these sales without incurring a cost for acquisition. That makes these sales uber profitable.
Growth happens when you bring new people to your universe.
But new people do not always come to you.
At times you find them and connect with them.
You find them in new geographies, new niche, and new tribes.
Let’s say that you are a digital marketer and specialize in selling ‘how to do webinars’. Through your knowledge of doing webinars, you have won the trust of those who want to do webinars. They love you for what you do because you deliver awesome value. That’s why they buy the courses you create.
Now if you know how to run Facebook ads. Chances are some of your existing audience will want Facebook Ads. So, people who are looking to learn how to run Facebook can be your new market.
Send them an email and ask if you created a Facebook ads course will they be interested in buying from you. Because they have already bought from you and value your knowledge many of them will say. And, instantly you will create a new market for you resulting in new sales and higher profits.
Let’s talk about how you can leverage social media to make more profit in your business.
So far, you’ve learned about deleveraging and getting more (web) traffic. You also learned about finding new markets and adding new products to your business.
The next logical thing is to use social media to share the success of your clients on social media. Tell the audience on social media where your clients were, what you did together and where they are right now and why your product is to bridge that helped them move from where they were facing challenges, to a place where their problems were solved.
You see, a small part of your prospects are already in buying mode. And, when they see your client’s success stories on social media they start trusting you enough to buy from you.
They think – this is where I am and this where I want to be. And, this person (you) has already helped others with this. And, I am sure he can help me too. So let me join his program.
This approach is powerful because according to a Hubspot report, 71% of consumers are more likely to make purchases based on social media referrals. There are other similar studies that show that a large percentage of online audience relies on what they see on social media for their purchases.
When you share the success of your clients on social media add a tracking link that tells you which post has been more useful for you when it comes to conversions. Measuring the impact of various posts on social media is important because what gets measured gets done.
So measure, and share the stories of success of your customers because people want to know from what you have to offer and in this way. There is no need for the hard sell.
This will help your brand become more trusted, and increase awareness and demand. When that happens increase prices and see your profits soar.
One of my clients used this idea to save £ 27,329, and to grow sales and added £ 165,237.49 profit to the bottom line.
This client wanted to run a marketing campaign to sell a specific kind of product, which he used to buy from a specific supplier.
The supplier could not sell directly to the consumers himself. My client, a retailer, could. So he reached out to the supplier and said, “Hey supplier, I need to run a marketing campaign to create demand for the product I buy from you and you also need to sell your product. How about we share the marketing cost so that I can sell more of what I buy from you. It will become a win-win situation because when I’ll get the sale, I’ll pass this sale to you, and you can make the product.”
The supplier agreed.
The cost of marketing including the shoots, the brochures, and everything else came to around £ 54,000 something. So my clients saved £ 27,000 by sharing the marketing costs. Thanks to this campaign, there was an uptick in sales, so much so that my client added £106,000 to profits.
Now think how you can implement this in your business.
To do it look at whatever you’re selling and think about who else can benefit from what you’re selling. Think about who can be a part of your offer. Once you identify that partner share the cost of marketing campaigns. And as a result of that, you provide a joint value proposition to your customers.
This saving is yours for taking if you take time to find and reach out to a potential partner. Remember how my client added £27,000 to his bottom line just by reaching out to them and getting them on board. You too can do that.
Let’s say you are a consultant and you are putting out new content and running ads on Facebook, LinkedIn, and Google. Do you know your cost per acquisition for every channel?
If you don’t then you are playing in the dark and probably leaving a lot of money on the table.
Let me explain.
Without measuring you won’t know what is it costing for you to get one lead. You’d think that you are doing right by using every channel because you spend £2000 in ads and get 100 lead at the end of the month. These leads convert into 5 paying clients and you are happy because your business is growing.
It could grow faster and bigger even if you just take the time to see how effective each channel is in generating leads and new business for you.
For example, if a lead costs £8 pounds on Facebook, £11 pounds on Twitter, and £40 on LinkedIn then you can clearly see that on Facebook you can get 5 times as many leads as LinkedIn for the same investment.
So, should you stop advertising on LinkedIn?
Maybe. But not too fast.
You got to be rigorous with these decisions.
For your business clients are more important than leads.
So, if you get 1 client out of every 4 LinkedIn leads but it takes you 25 leads to convert 1 client from Facebook leads. Then your cost of client acquisition on Facebook is higher at £200 as compared to £160 on LinkedIn.
Analyze the time and effort it takes for converting the leads and if there is a big difference platform to platform. Also, see if the clients from one platform are easier to work with than another platform. Consider all this while deciding on your platform of choice.
So what you want to be doing is you want to concentrate to be dominant on one or two channels where you can focus all your effort and energy, and where the quality of leads and customers is high.
You might be nodding and telling yourself I’ll right away look into my sales and marketing dashboard and find out the cost.
Sure, if you decided based on just your sales and marketing costs then you might be missing an important piece.
You might be missing on the cost of fulfillment.
Why this is important because your sales, your top line doesn’t matter as much as profits, your bottom line.
So, you need to take into account your cost of fulfillment – how much it costs you to fulfill a promise that you made to the customer who bought a product or service from you.
You don’t need any marketing software or any sales CRM system.
You can do all of this within the accounting software. Write to me if you want to learn how to set this up in your business.
When you set it right you can just look at your profit and loss statement, which I call a performance statement and see the profit or loss by running Facebook ads, Instagram ads, LinkedIn or YouTube ads.
When you focus on one or two dominant and profitable channels your profits grow. You also get an opportunity to reinvest new profits into further growth and multiply the profits. It’s that simple.
After you identify your most profitable channel, you can add another layer ahead and make more profit in your business.
Let’s say you have identified Facebook as one of the two most profitable channels.
Now, you need to take your marketing game a step ahead.
Get a savvy marketer onboard to run A/B tests, and split test your sales page headlines, and your email subject lines.
On your advertising platform, Facebook, in this case, test different ad copy, visuals, and CTAs. the person doing this should know what they are doing. So any savvy marketer will know that wholesale change does not work in this testing. You only change a small part of an ad in the test version and then compare it with the existing version.
Through this you test you identify some of your most profitable campaigns and double down on that.
This is helpful if you are investing a high amount on online advertising. If you have recently started paid ads and your budgets are low then don’t bother with it.
You might be saying but Shishir, this is slick marketing but why are you linking it with finance? Aren’t you the finance expert here?
Yes, I am. But I am also aware enough that it helps to understand the marketing processes and approaches, to be able to deploy marketing money in the most profitable places.
You can do all of this within the accounting software and see from which channel and campaign did you get the customer.
It’s important that you track because what gets measured gets done.
It’s ok to use a spreadsheet to track, sales costs, and expenses by campaigns. This will give you immense clarity about your marketing and about where you should put your energy and money for maximizing profits.
I was looking at the financial reports of one of my clients and noticed that he was using a bank overdraft. He was overdrawn by £10,500.
I also examined his balance sheet and noticed that his debtors owed him more than £25,000. I asked him, “John, why haven’t your debtors paid you?” He was like: “Shishir, it’s been more than 30 days past due date and they haven’t paid. I do have difficulty collecting the payments.”
He was not able to collect payments because he was always chasing the debtors for bank transfer. This should be a non-issue in today’s world where there are so many options to automate payments. By automating the payments entrepreneurs like John can help them (the customers) to help themselves.
You help them by giving your customers options that make timely payments hassle-free. There are tools like PayPal and Stripe that help you do that. You can also set a direct debit by GoCardless.
When you give your customers options, they can choose one that works for them and help them pay you on time. And when you have cash in the bank account rather than debtors, then you don’t have to use your overdraft like John.
This way you save on interest. You can also use the extra cash in the bank to try a lot of different approaches for profit growth that I have shared in this post.
If you want to host an event for your customers and prospects you can go to the venue of your choice several months ahead of the event date and offer to pay them early and get a discount. In most cases, you will get it because everyone wants money now.
The lesson here is to use systems and automation to make life easy for your customers and yourself, to make sure that you collect your payments from your debtors on time.
If someone asks me to pay with bank transfer, even though I want to pay that person I find it hard. I don’t have time to log into the bank, set up a new beneficiary and make the payment. If I get an option to pay with PayPal, I can just click the link and pay. That’s helpful because it is a trusted platform that does not ask me to log in to pay.
This is how it is with every business. Because as entrepreneurs, we all are short on time.
John could have saved himself the cost of carrying an overdraft just by giving different payment options at the time of invoicing. That’s what he did after our discussions.
If you are not doing the same, you’re missing out on an opportunity to get paid on time. And, as a result, you are waiting on cash that is rightfully yours and that your customers want to pay only if you made it easy for them.
And once you get it, thanks to automated payments, you can put it to good use for growing your business and profits further.
* (name changed to conceal identity).
Most entrepreneurs are focused on now – serving customers, getting the work done, and delivering the product and service. So much so that they don’t think about the future much. And, when they think about the future it is mostly about the revenue goals and not about people.
This short-sighted thinking can paralyze your business.
What do you do when 3 superstar employees jump ship in your small business? What effect will it have on your business? It can come to a halt.
This happened to one of my clients. He runs a recruitment business specializing in FinTech. He had hired a superstar employee. This guy had a wealth of knowledge about the recruitment industry. They worked together for about three years. My client taught him the ropes of the business and invested a lot of time and energy in bringing him to a level where he ran a part of the business.
But then one day this superstar employee suddenly left. When he left, he also took knowledge and business know-how with him.
See, when a new employee comes on board, you train him to bring him up to a certain standard to your expectations. It costs money. It also costs time which is more precious than money, because as entrepreneurs, we don’t have time. We have to make time for it. And, when that trained employee leaves everything we invested goes for a toss.
An easy way to solve this is to ask the employee to document everything they do and learn. Also ask them to create a cheat sheet, or step by step process periodically that anyone can use to understand their workflow and do it in case it is needed.
For a new employee, it is just a matter of stepping in and following the same process as the employee who they are replacing.
By doing this you save on time and money that goes into training a new employee. So the money that may have gone into training the new employee will now stay in your account. And, you can use this cash for any profit growth pursuit.
Write this down. Good process drives good results.
Look at the process of delivering your product or service and note how much time it takes. Document everything. Look at the parts that you can automate. Now, if it takes 40 hours to deliver what you sell through automation you can easily reduce it by 5-10%. With 10% time saved with automation, the delivery will now take 36 hours.
These kinds of processes have made Amazon the powerhouse it is today. They already offer same-day delivery and now are working to deliver within hours of placing your order.
Imagine what you can do in four hours’ time that you saved this way.
You can implement such processes in every part of your business like hiring, onboarding and for employees to do different parts of their jobs.
If your processes save time for your employees that is a win and money saved for your business.
On 26 February 2020, Liverpool announced a £42m pre-tax profit despite record £223m spend on players.
They made this profit on the back of an ever-growing turnover that increased to £533m in 2018-19.
Club’s sixth Champions League triumph has played a major role in this. This won’t have been possible with the great talent on the team like Jürgen Klopp who is considered one of the best football managers in the world.
But there is more to this profit growth story. Liverpool stuck on several lucrative deals like New Balance agreement is worth around £45million per season, Standard Chartered as the kit sponsor netting Reds (as Liverpool FC are lovingly called) a cool £160m across the five years. These are the only deals they have got there are many more like that.
The sheer breadth of deals with a wide range of companies means that Liverpool is now worth an estimated £1.02bn, up from £710million in 2017.
Thanks to the superb play by the team on the ground, the financial growth was sure but these massive deals show a focused approach to add money to the coffers while the team is winning.
What can you learn from this?
That if you build a big engagement community around a brand, then you can get partnership deals and give a big boost to your day-to-day revenues and profits.
You don’t need millions of followers. You can strike such partnerships with a small community of 10-20,000 people. Of course, the deal size won’t be as big as Liverpool but it will be a good addition to your usual profits.
Next time, you ignore social media as something that you have to do because everyone else is doing that there are influencers out there who can command £10,000 for a one-off post on their Instagram account.
Know that there is real power in creating an engaged community of raving fans around your brand.
You don’t need to be a celebrity to do that but you can definitely become one if you play your cards right and then you can profit off of the strength of your community.
There you have it 47 ways to increase profits, in addition to one powerful bonus strategy.
If you ever wondered how to grow sales and profits in your business or how to increase profits for small businesses, this is where you get your answers.
I hope you are already thinking of implementing these in your business. If you have doubts or want to discuss these ideas, book a short call with me by using the appointment booking link below. Glad to hear from you always.
More than 10 years ago, pushed by circumstances Shishir Khadka started his journey of gaining financial confidence and achieving financial peace. Over time he achieved his own goals and started helping other business owners. The struggles of his mom after his father’s sudden demise, before Shishir’s success, motivated him to focus his energies on helping female entrepreneurs. What he learned by helping them turned into Profit Pioneer Program that helps busy business owners master cash flow and profits. Shishir is also the host of the upcoming The Profit Pioneer Show.
And need help implementing one or more ideas that I shared above?