When my clients commit to ActionCOACH business coaching, they expect results. One clear indicator of success in the business world, is increased profits. If one of your goals for 2018 is to increase profits in your business, keep reading. You’ll be amazed at how a small increase in one area of your business can have a huge impact on your bottom line.
Let me introduce you to the five simple ways you can increase your profits. I’ve witnessed my ActionCOACH clients implement this simple formula for massive results. You may be surprised to discover that you already have the tools necessary to see your business grow substantially in 2018.
The ActionCOACH Formula: 5 Proven Ways to Increase Your Profits
The following are the top five factors to pay attention to if you want to increase your take-home profit each year. Taking a hard look at where you are currently for each of these factors will give you a starting point. Then, brainstorming ways to impact each category will be your ticket to increased profits. Later on, I’ll explain how utilizing all five factors will, without question, grow your business.
#1 Number of Leads
What is the total number of qualified prospects who enter into your sales funnel each week, month, and year? If you’re not tracking this key performance indicator, start now.
#2 Conversion Rate
How many of those qualified leads converted to a sale? You can calculate your conversion rate with this equation: number of sales ÷ number of leads = conversion rate (percentage). For instance, if you close 100 sales from 500 leads, your conversion rate is .2, or 20%.
#3 Number of Transactions
What is the average number of transactions the average customer will make in a week, month, or year?
#4 Average Dollar Amount Per Sale
What is the average dollar amount a customer spends at each individual sale?
#5 Profit Margin
What percentage of each sale is profit, versus the percentage that pays for the resources required to produce the product or service? You can use the following calculation to figure out your profit margin: (Sales Revenue – Cost of Goods Sold) ÷ Revenue = Profit Margin (Percentage). Let’s say it costs you $100 to produce your product and you sell it for $115. Your profit margin calculation would be: $115-$100=$15/$100=0.15. You have a profit margin of 15%.
How Do These 5 Factors Impact Your Bottom Line?
Let’s use some round numbers to see how this works. If you received 4,000 leads this year, and your conversion rate was 25%, you would have served 1000 customers. If each customer made two transactions and the average amount they spend with you was $100, your revenue would be $200,000. Your profit margin is 25%, so your profit for the year was $50,000.
Ten percent may not sound like much, but this slight increase in all “five ways” will create an impressive increase in profits! Take a look to see what just 10% can do for your business:
Now, let’s talk about what a 100% increase would do for your business. Here you can see the power of the “five ways” – your ability to increase profit compounds. If you double your efforts in these five areas, you’ll increase your profit by 32 times! By working with an ActionCOACH Business Coach and using these methods to increase your profitability, you’ll leverage what you’re already doing to see massive results.
Your ActionCOACH Business Coach Can Get You Started
When you’re a small business owner, it sometimes feels really hard to grow, but when you look at growth using the five methods I’ve described, small increases can lead to dramatic profits. If you’re not sure how to increase your margin by 10%, or 100% next year, I’d love to help. In addition to teaching you how to put these five methods into action, I can provide accountability, assist in creating efficient processes, and be your cheerleader!
For more information, or to see if you qualify for a free consultation, email email@example.com, or call (414) 324-0834.