In this post I would like to explain and teach you about the six key profit drivers in your business.
I created a six week course to go through these key profit drivers, they are that important. For now, when you understand and really focus on improving the six key profit drivers, you’ll find that:
- number one: your business will be so much simpler, because you’ll have fewer key metrics and things to focus on.
- number two, you’ll make great progress towards your goals, because you’ll know exactly what to aim for and you’ll be able to have confidence when you’re making decisions about the future.
- Finally, all the little questions and uncertainties will go away. Generally, things kind of work easier.
The six key profit drivers are:
Number 1: Clear Goals & Plans
The first one is having a clear plan and a goal for the future. In particular the goals, knowing what you’re aiming for means that you’re less likely to get distracted by shiny objects, things that sound cool, but aren’t actually going to help.
You’ve also got a way of judging whether you’re wasting time, or doing something that isn’t really relevant, and it gives you a great filter for productivity. You can say no to things that aren’t going to get you towards your goals.
Number 2: Simple Monitoring System
The second one is a system for monitoring and tracking your progress towards those goals, and also just monitoring your business.
There’s so many complex parts, so many moving parts in your business, it’s good to have a system that allows you to keep track of all of them, without you actually having to look over everyone’s shoulder, particularly if you’ve got a remote team, it can get a bit of a challenge.
Number 3: Healthy Margins
The third profit driver is getting your margins right. A margin is the difference between what you charge for your product or service and what it actually costs you to deliver that product or service, with none of your overheads.
These are the 80:20 of profitability. But it’s still number three, because all these other profit drivers contribute in many important ways.
If you get the margins right and find that you don’t have to work ridiculously hard all the time, you can actually hire a team, and you can invest in growth. In particular, you can also invest in profit driver number four.
Number 4: Efficient & Effective Marketing
Profit driver number four is efficient and effective marketing. Without any marketing, no one will know about your business and you won’t be able to sell anyone anything.
So having the marketing to be effective means that you’re focusing on the right things with your marketing.
Efficient means that you’re getting a good return on the investment. So you’re spending some money, you’re spending some time and you’re actually getting a good amount of results for that investment.
Number 5: Sales System
Key profit driver number five is Sales. For sales, you need a sales system.
Sales is not something that happens by chance, you don’t have to fly by the seat of your pants!.
Once you have a sales system, then the leads that your efficient and effective marketing bring in for you, you then convert them quite efficiently and effectively as well.
This process means that it’s repeatable, it doesn’t have to be you that does it, you can automate it or delegate it. Having a system means that it’s reliable, that it turns those leads into clients and customers
Number 6: Productive Teams
Finally, number six is Productive Teams.
Now if you want to actually grow a bit more than you just being a solid freelancer, if you actually want to have a business with a team with processes, and if you want any significant size revenue, then you’re going to need a productive team.
Having a productive team is more than just each individual person being productive.
It’s about how they relate to one another. It’s the structure of who goes into what role. What’s the job description? Where do you hire these people? How do the managers manage efficiently? How many managers do you need?
All those questions! If you answer them, you have a productive team, they can move your business towards the goals, your customers are happy, and you don’t have to do everything yourself or constantly fight fires.
So, to recap, the six key profit drivers are:
- having a goal and a plan for the future.
- having a system to track progress and monitor all the pieces of your business
- getting your margins right, the price versus cost of what you do for your clients and customers
- efficient and effective marketing
- sales system
- productive teams.
What about you?
Are you actually focusing on all six of these key profit drivers?
Do you find that you have a natural inclination to one or more of them that you prefer working on or you’re naturally good at working on?