Earlier this week, I was an “expert” at an Implementer event run by the Entrepreneurs Circle.
The Entrepreneurs Circle has thousands of UK businesses as members looking to help their businesses grow. Every year, they run the Implementer, where about 400 of these businesses come to Birmingham and spend some time with the experts. The experts cover everything from business strategy to marketing, AI to PR… and, of course, the numbers. And that’s where I come in.
Over a couple of days, I had a steady stream of business owners asking me questions about their accounts. But, for many of them, the common central theme was simply:
“Jon – how do I boost my profits?”
Whenever anyone asks me this, I come back to a straightforward framework of five clear and practical methods. I thought it would be worth sharing them with you now.
I’m a mathematician by trade, so I love a good equation. Who doesn’t?!? And here’s a good one:
Profit = Sales – Costs
To boost your profits, you really only have two main levers:
- Sales (revenue): money coming in.
- Costs (expenses): money going out.
Let’s look first at costs – often the quickest win:
1. Reduce Your Costs
Any reduction here directly increases your profit. Start by asking yourself:
- Could I negotiate better deals with suppliers?
- Can I automate processes to reduce inefficiencies?
- Which unnecessary expenses could I easily cut today? (I’m a sucker for a software subscription that I forget about!)
Now, onto sales and, to keep me happy, another equation.
Sales = Number of Customers × Value per Customer
And that gives us four more clear areas to focus on:
2. Get More New Customers
Growth means attracting new customers:
- Sharpen your marketing
- Get more referrals (the subject of a session I ran for Liverpool business owners last week)
- Stand out clearly from your competition
- Improve Customer Retention
Keeping your existing customers happy and loyal:
- Introduce loyalty schemes or rewards.
- Maintain regular, valuable communication.
- Ensure that quality and service are consistently maintained.
- Raise Your Prices
It’s simple maths – a small increase can significantly boost profit:
- Clearly communicate the value of your offering.
- Test gradual price rises without alienating customers.
(And I will mention here that raising your prices is the single quickest way to boost profit. And we have a handy little matrix that shows the effects of a price increase even if you lose a few customers!)
5. Increase How Much Customers Buy
Encourage more frequent purchases or larger sales:
- Upsell additional products/services.
- Bundle items or create subscriptions.
- Offer repeat or regular purchase incentives.
Adding Strategic Clarity to Your Actions
These five methods give you quick, practical ways to boost profits today. But at JDA, we also like to back up practical actions with clear strategic measurements. For this, we use software called Clarity.
Clarity focuses on five key strategic measures:
- Revenue Growth: Reflecting your success in attracting and keeping customers.
- Gross Profit: Showing how efficiently you price your offerings and manage direct costs.
- Operating Profit: Indicating how effectively you control your overheads.
- Revenue per Employee: Highlighting team productivity and efficiency.
- Cash Days: Measuring how quickly your sales turn into cash.
We can demonstrate the impact of implementing each of these measures and then develop a plan to do so.
By combining immediate, practical strategies with the strategic Clarity metrics, you don’t just boost profits temporarily – you create measurable and lasting success.
So, there you have it – five practical strategies you can implement today, and five strategic measures to track and sustain your profit growth.
It’s a powerful combination…so get implementing.
If you have any questions, please email su*****@*********************co.uk or give us a ring on 0151 380 8084.
Many thanks
Jon