This book is designed to give you the inside track on everything you need to know about bumping up your business. It aims at providing you with an INSTANT guide on how to improve your profitabilty. Once you’ve read the book, you’ll know precisely what it takes to make your business very much more profitable than it now is.
Instant Profit explains why in business profit is king, and details the process through which entrepreneurs can expand their bottom line by increasing their profit margins, transaction numbers, and conversion rates.
Author Brad Sugars’ approach to increasing profitability centres on the idea that profit itself is a function of other business fundamentals. In the book, Brad outlines the steps needed to attain greater profitability through a narrative story outlining his business coaching relationship with Charlie, his auto mechanic and friend. Through the narrative, Brad details how entrepreneurs can increase the quantity and value of individual sales to ultimately affect their businesses’ bottom lines.
“Almost all business owners know that they need to be profitable in order to succeed, but few truly understand the factors that affect their profitability,”
Summary and main learning’s from reading the book ‘Instant Profit’:-
This book is about everything you need to know about improving your Profit Margins. It’s a road map to profitability. Its aim is to provide ideas and guide on how to improve profitability. Be pro-active and determine your own destiny.
• Profit has to do with the last parts of the Action Coach Business chassis – average $ sale (getting people to spend more) and margins (improving the amount you make);
• Open up your mind and think how you can use these strategies and ideas to increase profit – don’t discard them;
• There is additional profit just waiting to be made;
• First, know where your Business is at from a profit point of view e.g. know your numbers – do a survey to calculate exactly what your average $ sale and your gross profit margin percentage is;
• Just by putting the spotlight on these areas, your Business will improve;
• It helps shift thinking not just to turnover, but to profit;
• Profit definition – the return a Business receives after all operating expenses have been met.
YOUR PROFIT CHASE STARTS WITH YOU
• Its all about your attitude;
• Think of your Business as an Investment;
• Invest some time in planning, setting goals and growing yourself and your Business;
• Get your Business to the stage that it provides you with the lifestyle you desire, to get paid what you are worth;
• You need to change your approach to Business if you want to drastically improve your bottom line;
• Consider these points (pages 23,24):-
1. Cost reduction versus Income growth – can only cut expenses so much – focus on generating more income i.e. growth – the bottom line jump is limitless;
2. Focus on Cash flow – create a massive cash flow gold field;
3. Wallet Share versus Market Share – how much, how many and how long you can sell to each customer;
4. What Business are you in – should be the Profit Making Business;
THE 4 M’S OF PROFIT
• Management, Money, Marketing, Merchandising;
• These are more strategic strategies;
• They cover the fundamental decisions generally the Owner or Manager makes;
• The results to the bottom line are much more immediate and direct.
PART 1 – MANAGEMENT
Makes a direct bearing on profit;
Can be implemented almost immediately;
• Provide Team Training – one of the best investments you can make; great way to build team spirit; improve leadership and communication; have systems in place; Have a good work environment; Have scripts for all areas;
• Concentrate on A & B grade customers – sack C & D grade customers;
• Keep an accurate Database;
• Have a Purchase authorisation system;
• Remuneration;
• Efficiency, Productivity & Time Management;
• Systematise the Routine, Humanise the Exception;
• Improve your Negotiating skills;
• Recycle;
• Invest in Technology;
• Outsource where necessary;
• Stop running advertisements that don’t work;
• Check all your accounts.
PART 2 – MONEY
Must have a handle on your Business finances – must manage from a financial point of view;
Get your accounts under control – see every month what is happening, your income from all products, where every $ is being spent, your margins on each product;
What are money related strategies – those that will GENERATE more Profit -
• Audit Costs and Set Budgets
• Set Key Performance Indicators for all areas- The Business, Owners, Departments, Team
• Increase your Margins/Prices – the easiest way to increase profit (see Increasing Profit Sheet) Try doing it on 80% of your products/services – Just Do it
• Stop Discounting
• Make it Easy to Buy
• Re-organise your Financial Affairs
• Reduce costs
• Invest in Technology
• Reduce Taxation Expense
• Send out your accounts on time
• Obtain deposits (some industries only)
• Complete monthly or weekly Profit & Loss Reports
• Work out costs as a percentage of sales and reduce down
• Calculate wages as a percentage of sales and work to reduce
• Charge for offering a financing facility
• Charge consulting fees
PART 3 – MARKETING (SALES)
Spend time on marketing, getting the product off the shelf (selling);
Build up repeat Business and create customer loyalty;
Have critical non essentials, small gifts for customers;
Marketing related strategies are tactical decisions taken that relate to the marketing & sales function:
• Upsell – sell the customer a higher investment version; and push the benefits
• Cross or add sell – done well by McDonalds; sell other items, package deal etc
• Down Sell – only use if cant upsell or add sell, better than no sale
• Make use of lists – Check list, shopping list, questionnaire
• Use questions so the issue of price is negated
• Offer great value
• Create package deals; bulk buy deals; gift if they spend over $x; incentives for bigger purchases; three for two; buy one-get one free
• Educate your customers on value, not price – get your customers focused on the benefits of the product, and not the price
• Give Team incentives for obtaining bigger sales
• Ask people to buy more e.g. spares, replacements etc
• Sell through direct mail, internet
• Encourage impulse buying
• Have closing the sale questions
• Ensure your customers know your full product and service range
• Sell service contracts as an optional extra
• Sell extended warranties or insurance
• Run in store promotions
It’s about making those extra few sales that you would not normally get.
PART 4 – MERCHANDISING
Think laterally, think big and outside the square;
Provide customers with a specific product or service they want and fills a specific need;
Merchandising strategies are those that concern the type of product line up the Business stock, merchandising that it deals in and offers for sale;
• Sell more big margin goods or services – know how you make and your margins on each item
• Stock more high priced ranges
• Sell fast moving stock – higher volume equals higher profit- get your stock moving quickly
• Carry exclusive lines
• Sell your own label
• Sell only quality
• Create a quality image – professional, up market, well presented
• Reduce your range – delete items which don’t move quickly;
• Take stock on consignment
• Reduce the amount of money tied up in inventory
• Buy in bulk
• Buy stock of only what you need
• Cut out the middleman, buy direct from the manufacturer
• Sell off old stock – have a closed door sale
• Re-arrange the layout of your store
• Pay attention to point of sale material to improve sales and average $ sale
TEST & MEASURING
Test and Measure everything so you know what is working and what is not;
Ensure to calculate exactly what your average $ sale and your gross profit margin percentage is;
Decide which strategies directly apply to your Business, and start off by choosing just a few;
Get your Team involved, they will have ownership and the process will work better and quicker;
Not all strategies will work, keep trying until you get results;
Some strategies work in some Businesses but not others;
How you implement the idea can also have an effect;
A few strategies working together can have a great compound effect.
CONCLUSION
Profit building strategies focus your mind and attention on what needs to be done to maximise your profits by increasing your average dollar sale and margins. This will help you learn more about your Business and grow your financial results.
BE who you want to be, DO what you need to do, in order to HAVE what you want to have.
Positive thought without positive action leave you with positively nothing. Get into Action.
Summary and book review by Mark Carn.
Building Systems Into your business
