When owning your own small business it’s in your own best interest to make sure you are making a profit. To be successful in the long-term your business needs to be able to sustain enough money to cover running costs plus extra insuring that you are maintaining a beneficial income for you and your family.
At Biznostics, one of the missions our customers can do is to work out how much profit you’re making in each of your products or services. After all, the overall profit of your business starts with making profit in each of the products or services you sell.
How do you find out what profit your business is actually making?
This is as simple as breaking down all your variable costs and knowing what you are charging your customers at the moment so you can see exactly what profits you are making on each item you sell.
For example, when following up with one of our customer on a particular mission, he was considering to increase the price of his products. So he selected the top 15 products that he sells and discovered that he was losing money on 5 of those products, was only making $5 every time his team did a particular job and on average just $15 on another one. These jobs were actually pulling the overall profit of the business down and in some cases would be better off not doing these jobs at all!
At the end of the day, it is not a matter of how long this has been happening or why it has happened but it’s a matter of knowing what is really going on for each item that you sell. Whether you sell products or a service – it doesn’t matter, the question you should be asking yourself is “What am I really making out of this?” and “What is my gross profit?”.
The reason being is that your gross profit is actually funding the rest of your business. If you’re not aware of what money you’re actually making, you could be like this customer and end up making yourself really busy by increasing your level of work. And yet all that hard work isn’t making you money. But it’s not too late to do something about it.
Re-evaluate your costs and pricing to maximise your profit
So whether you are selling a service or product it’s advisable that you;
– Have a look at your top selling products.
– Determine which ones are making money and which ones that aren’t.
– Implement changes to pricing so that it works better for you.
It’s got to work for you, your customers and everyone involved in your business. Because making a sustainable profit means that you can operate your business for the long-run.