Increasing Your Company's Profits

The goal of any business is to generate profitability. For this reason, I find Mike Michalowicz's approach on how to achieve this goal through five very specific strategies extraordinarily interesting. In his book "Profit First", he addresses this issue in a very specific way. For this reason, I recommend reading it. However, if you do not have the option of reading the book, I will mention below some strategies he mentions in his book, which I have personally put into practice in my office, and I can attest that they work, if you are able to overcome the fear of putting them into practice.

1. Raise prices: this option is terrifying for most entrepreneurs, since they almost automatically conclude that raising prices will lower their sales, or worse, will lead them to lose customers. But the truth is that it doesn't have to be this way, because it depends a lot on how you approach this issue. If you simply raise prices, customers will obviously not see why paying more for the same thing. Therefore, if you increase your prices, you must give the reasons for doing so, and it is easier to do this if you offer different options, or packages, in which you increase the price based on added features or services that your customer can choose to accept or reject. This is called "self-pricing". On the other hand, it will also be easier if you increase prices progressively, since it is not the same to raise prices by 10% than to raise them by 20% from one day to the next.

2. Lower Expenses: If you can't raise revenues, then try to achieve the goal to reduce your expenses, and you will see your profitability increase. You may say that you cannot decrease your coasts, but I am convinced that if we start to review the list of expenses of your company, there are many bills that can be eliminated if you get out of your head that this expense is super necessary for your business. As I don't want to make this article too long, you can consult the article published in the magazine "Emprendedores", ("28 Ways to Reduce the Costs of your Company"). I am sure that among 28 proposals, you will be able to take advantage of some of them. If you can't identify any of them, then you desperately need the help of a consultant.

3. Have the courage to reject unprofitable customers: if you sell products or services that are unprofitable, or not profitable at all, stop selling them. Work for something. Don't work if you are not going to earn from it. Think that it is not only a question of the money you receive and the money you have left, but you must also consider that with each operation you carry out, you are assuming risks, (the risk that your client does not pay you and you lose everything, the risk of damages that the client may suffer and then claim you, the risk with the Tax Agency...). Therefore, if an operation does not provide you with the minimum profit that you have established as reasonable, reject the operation and work for something... or what is worse, only to increase your risks of having problems. So, set a minimum profit for each operation, and if you don't reach it, Look for a better one. It's no longer just about not winning, but also a question of not losing.

Although it may seem that all of the above cannot be applied in your case, believe me, you are not so special, nor is your case so serious. The problem may be that you have to "roll up your sleeves" and be imaginative. If you can't do it yourself, get help from someone who really knows what to do. Even if you have to pay their fees, it will be an investment with a high rate of return if the consultant does his job well, and if you have the courage to put his advice into practice.

Remember that if you need it, we can advise you to make this process as fast and effective as possible. Just contact us, (diterno@proemabogados.com), and we will get to work.

David Tierno García

Attorney at Law