While some businesses are more complex than others, all have one thing in common – well, really, 4 things in common. No matter what product or service a business sells, they will build their revenue or profitability in one or more of the following ways:
- Increase the number of customers
- Increase the number of transactions per customer
- Increase prices
- Decrease costs/increase efficiency
One note about #4; notice that 3 of these strategies deal with revenue and only one with costs. Once you embark on a business, you start incurring costs. Perhaps you can obtain the same products or services at a lower cost from a different vendor, or perhaps you can find a way to work without a particular product or service at all; and any of these actions may result in higher profits. But no matter 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 a business owner should routinely look at their costs, their best bet for increasing profits lies among one or more of the first 3 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.