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Don’t grow your sales . . . focus on profits first

Selling more is not always the solution to profitability in a business. There are 3 steps to take to improve your business profits without driving sales.

 

Hi there! Sean Martyn from Business by Design. Beautiful 250C degree, July day in Coffs Harbour.  I’m here on the Coffs Harbour Jetty just having a bit of a walk, and thought I’d have a little bit of a rant.

I was at a workshop this morning, business networking meeting. A lot of discussion about the ways to improve profitability in business is to drive more sales. In my experience, you know what? In most cases that’s bulls**t.

Pushing more sales through an incapable system would just make a bad problem worse. Reality is that for most people what we need to do is, we need to increase profit and then increase sales. There are three primary things that you and everyone else needs to focus on to improve profitability before they drive extra sales into their business.

Number one: eliminate profit leakages. Profit leakages come from three sources, they come from unprofitable clients, they come from unprofitable products, and they come from unprofitable projects. While ever those exists is a really, really good chance that profits gonging continue to leak even though you add more sales into the business.

The second thing that you need to be thinking about before increasing sales is: are there wastes in my business? The Japanese have shown through the Toyota production system that there are seven deadly wastes, just Google that. Seven wastes and you’ll find that their multiple instances of this in most businesses that need to be eliminated so that new sales being added are not being compromised by that waste problem.

And the third thing that we need to be thinking about is eliminating low productivity. If productivity can be improved in yourself, in your team, and in your equipment, that’s free profit. Now the key point here is that, all of the things that I’ve talked about are completely within your circle of influence.

Sales, on the other hand, depend on the customer saying yes. Profit leakages, waste, and productivity are all entirely within your control. So, why not focus on them, improve your profit first and then think about driving sales.

That’s going to guarantee a result, that you can completely control and it’s going to debunk a myth that the only way to make money and add more profit business is drive more sales. That’s enough of a rant, it’s an absolutely spectacular day in Coffs Harbour. I’m going to go and have some lunch now. If you like what you heard, then you might have a chat about how that might apply to your business. Just message me and maybe we have a coffee and a chat about how this more apply to you.

Thanks a lot.

Sean Martyn, signing out.

Phone (02) 6658 0775