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The Components Of Profitability


It’s kind of strange how many business owners don’t recognize the parts that form the profitability of their company. Many think it’s just revenue minus expenses. Well, it is that equation but profitability is so much more.


Your accounting team looks at your balance sheet, and your statement of cash flow to build out your P/L. Which is also correct. My clients and I look at what drives the profitability of your business.


Here are 6 components that you can impact and control really drive profitability that we look at:

Lead generation and conversion to the next step in your process. Generating more leads and converting them into prospects is the starting point for all future customers. It’s the most important point for you to build your profitability


Closing rate Here’s where you turn your at-bats turn into singles and home runs. You can improve your sales closing rate and convert more prospects into customers.


Retention of existing customers. It's more expensive to acquire a new customer than to retain an existing customer. Keeping them onboard is within your power.


Average dollar per sale. Think about your McDonald’s order, would you like fries with that? How about a pie or supersizing? These are called upsells and cross-selling. If you have complimentary products or services, you can improve the amount of money you bring in from each sale.


Frequency of sales. Can your product or service be purchased on a repeated basis? Of course, they can. Repeat purchases are a great way to build your profitability. You can sell your existing services as a membership program too.


Fixed and variable costs. Auditing your expenses quarterly is very important to your bottom line. Remove the expenses that aren’t necessary for getting a customer or keeping a customer. All other expenses should really be cut out to improve profitability.


After improving these 6 areas, your profitability can bring you either more money to reinvest for growth or take out of the company. You’re in control of your profitability.


Marcia Riner is a business growth strategist. Business Owners come to her team looking to 2X - 3X their revenue and profitability without spending an additional dollar on marketing or advertising. In fact, she is able to show prospective clients a clear ROI to working with her before they decide to hire her. Don't believe it? Let her prove it to you in just a few minutes.


Marcia hosts a weekly podcast with videos on YouTube @ www.Youtube.com/profitwithaplan and audio @ www.profitwithaplan.com. She is constantly sharing business growth tips on all of her social channels @marciariner

Marcia has created an incredible FREE webinar that will show you how you can boost your net profit by 45% in just 30 days. Go check it out while you can @ www.30dayProfitBooster.com

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