TOO MUCH INVENTORY For anyone who sells a product, this is easy to fall into. You put in an order, and it’s cheaper to buy in bulk. Or you over- estimate demand. Having too much inventory eats up your cash flow. You can’t claim it as an expense until you’ve sold it. If you can’t turn over this inventory, then it’s a loss. WORKER PRODUCTIVITY Small business owners really care about their employees. They want to make sure they are happy in their job. One mistake small business owners often make concerning their employees, is giving them work to do when there isn’t really anything to be done. If you are a contractor and you send an employee out on a job, that’s great, and that’s what your employee is there for. But if business is slow, and you are paying that person to clean up the shop, this results in lower productivity. If this sounds like you, take a look at your paying jobs and the work your employee does. PROMOTION Advertising and promotion are important to growing your business. However, there are many different ways to go about it, and a wide range of prices. Make sure what you are spending your money on is bringing you a return on your investment. If you are currently advertising on a platform, but can’t show a benefit, consider cutting this stream. Your task: Have a look at your expenses. Where is your money going? Are you paying more for materials than you feel you should? Did you make a major purchase of inventory? Are your employees bi- weekly paycheques reflective of productiv- ity level? Are there any ad purchases that aren’t benefiting your company? Take note and take action! Repeat this every quarter to make sure you are on top of things. Want More? Want help assessing your numbers and taking stock of what you are spending where? Our tool, “Finding Opportuni- ties to Increase Profits” will compare your financials so you can see your trends, and will also compare your business to industry averages. Get instant access to your report and find immediate opportunities to increase profits. Get it HERE! Want 1-on- 1 help? We’ll do the assessment for you then explain what everything means. We will also work with you to set goals, and create an action plan. You also get coaching from us for 12 months! Learn more about Profit Camp HERE.
item, and if you hire subcontractors to provide a service it’s considered a direct cost of material. Wage costs: what you pay your employees (and yourself if you are incorporated) Other operating expenses: The costs you pay no matter what, such as rent, electric, phone, internet, signage, adver- tising and promotion, etc. Profits What is left once you pay all of your expenses. This is the cash that goes into your pocket! And the experts... As for the experts and gurus promoting their 6-figure launch or their $20,000 month…Good for them, that is cer- tainly an accomplishment, but it doesn’t tell the whole story. It’s possible that in their $20,000 month, they had $18,000 in expenses. Which means that their profit for the month was only $2000. What if their expenses were $20,000? That means they put all of that work in but made zero profit! It’s also possible that they spent $21,000, which would mean that they actually LOST $1000. Profits = Revenue-Expenses Don’t get me wrong. I’m not saying that revenues don’t mean anything, they do. Increasing revenue is an important objective for any business. You need to get your revenues to a certain point to be able to have a viable business. This in turn, will reduce expenses as a percentage. But, you do need to keep your expenses in check. If not, you will never be able to grow your business or make a profit. Your goal should be to increase revenue while keeping expenses down! Got it? Good! Here are some common expenses that might be eating into your profits: PAYING TOO MUCH FOR MATERIALS. Paying too much for your materials brings your profits down. There are a few causes for this: 1. You may be paying more for your materials than average. 2. You may be wasting materials (such as food, metal, etc). 3. Your prices may be too low – you might not be charging enough to make a profit on what you are selling. We see this a lot. Are you starting to see where I’m going here? And the importance of profits? So, now the reason you are here. How to increase profits. I’m glad you asked.
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