Think more customers equals more profits? You may be surprised to learn that this isn’t true.
Don’t make the mistake of focusing on the wrong strategy when working to make your business profitable or to increase profitability.
Read on to learn the right strategy to becoming profitable or increasing profitability.
How do I Become Consistently Profitable?
I received a question that came via email and I want to answer it here because I think this is a question most entrepreneurs have. The question reads:
“How can I better utilize the customers I currently have to become profitable and how can I market and attract more customers to become consistently profitable?”
Read on for the answer. It may surprise you!
I have been an outsource CFO for over 25 years and I’ve spent a lot of time in the retail industry so I understand the marketing and sales piece of doing business.
But to answer the question “how to become consistently profitable” we have to go deeper than marketing and sales.
Becoming consistently profitable may require a tweak to your mindset. Here’s why:
You may need to do a little more “aiming” before you start “firing” and hoping to become profitable by attracting more customers.
In my book The Next Level Entrepreneur I write:
“…many entrepreneurs operate with a “ready, fire, aim” approach!
Sometimes they hit the mark, but typically they miss more than they hit. Their solution?
In business,…misses can be expensive, especially for a new company…
After years of having many more misses than hits I developed a new approach:
“ready, aim, fire”!
My process will slow you down a bit on the front end, but I believe you will avoid costly pitfalls and stumbles as you launch your company. Plus, you may find yourself ahead, sooner rather than later.”
~ Taken from page 117 of The Next Level Entrepreneur.
Ready, Aim, Fire
Most people would think “if I increase customers I will increase my profits.”
But that’s not necessarily the case.
So before you “fire” on attracting more customers, first you must look at the profitability of the individual services or items you’re selling.
The goal is to understand the maintained margin.
In other words, you may think you’re operating with a 40% profit margin on a service or product, but when you look at what you maintained as a profit margin over the last year, you may see that it’s less.
A couple reasons for this may be sales that were run or discounts that were given to customers.
If this is the case, you may realize that instead of a 40% profit margin, the service or product really only maintained a 25% margin.
That changes the bottom line dramatically!
So you need to work at the “aiming” level and adjust your margins so that you can be profitable.
Then work at the “firing” level and attract new customers now that you are set up to make a profit.
A Word from an Entrepreneur on this Topic
Here’s what Garrett Takach (Founder of Ninja Park and Fitness and Competitor on NBC’s American Ninja Warrior) had to say about this:
The last few years my team and I have been “firing” on attracting new customers because we believed that more customers would equal more profit.
But we were wrong. I was left wondering why we were missing our goal of consistent profits.
It wasn’t until George pointed out that there isn’t enough margin on our membership price to perform all the services we offer that I realized the problem couldn’t be solved with more members.
Whether I had 200 or 2,000 members, I would fall short of my profitability goals with the system I was on-boarding members into.
With George’s guidance and direction, my team and I implemented a price adjustment strategy that increased our margins and set us up for success in becoming consistently profitable.
This strategy was exactly what we needed and thanks to George’s advice on how to successfully introduce something like this, we are more profitable on each member and we are continually increasing our profitability from our membership.
As an entrepreneur, I understand that it’s difficult to slow down and “aim.” But if we didn’t, we would be constantly “firing” and on working our butts off to on-board members into a system that doesn’t work for us in achieving our profitability goals.
George and I made an eCourse that I highly recommend to you! It will guide you through the “aiming” that is required to achieve more hits and less costly misses.
By the way, the eCourse is FREE! Enjoy! ~ Garrett
The course Garrett is referring to is called:
“The 4 Keys to Record Breaking Success”
One of the keys is profits and I explain in detail how to complete a specific action that will set you up for success in your profitability goals.
The course contains 5 short videos and one action per video to take that will be great “aiming” so you can “fire” and hit your target.
The course is delivered to you via email over the period of 5 days.
Click the link below to learn more and opt in to the course to begin “firing” with great success in 2020!
To your growth and success!