While some businesses are more complex than others, all have one thing in common – we’re all in business to make a profit. And when you dig down, that commonality breaks down into four basics. No matter what product or service a business sells, revenue or profitability can be built in one or more of these ways:
- Increase the number of customers
- Increase the number of transactions per customer
- Increase prices
- Decrease costs and/or increase efficiency
Notice that three of these strategies deal with revenue and only one with costs. The moment you embark on a business, you start incurring costs. In order to reduce these costs you can obtain the same products or services at a lower cost from a different vendor, or you might find a way to work without a particular product or service at all. The resulting cost reductions may result in higher profits. BUT, no matter what you do or how hard you work at it, you will never be able to reduce your costs to zero and still remain in business. So even though any savvy business owner should routinely look at their costs, your best bet for increasing profits lies among one or more of the first three strategies.
We have decades of experience working with a large variety of businesses. Call us and we can help you identify which strategy is best for you.