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3 Simple Steps to Improve Profitability

    "I want to become a big company!" - That is what entrepreneurs are often mentioned when talking about future goals of their comp

     Of course, the concept of "big” depends each person’s interpretation, Most of the entrepreneurs are "shaking hands" when managing a company with revenue $ 100,000, while others define success is to create millions of dollars.

     But, I was surprised because I never hear anyone say this, "the aim of our company is to earn as much profit as possible." After all, earning a million dollars after paying off the cost is more important than making a million dollars in sales.

     One more thing need to think, you will never find a company with positive cash flow and ability to generate good profits in the trial of the bankruptcy issue, but you can easily find companies with sales to millions of dollars which still finish his fate before the bankruptcy court. So simple to say, "big" does not mean that companies can pay all debts.

     Here are easy implementation strategies to help improve cash flow and profitability of your company.

Step 1: Remove the products and services that do not generate income

     Today, finding a company to trade in the products or services that do not generate income is not too difficult.

     For example, several years ago, I was hired to advise a guitar manufacturing company that is on the brink of bankruptcy. Although they were very beautiful and good guitars, the company earned non-profit from a large proportion of these products.

     My question for the manager team is, "what statement made more difficult: Tell employees that the company will discontinue producing the non-profit guitar or protecting people that made company closed?” Thus, it is necessary to take immediate changes.

     This is another example. My friend has opened classes along the coast in Northwest Pacific. Her classes for outstanding athletes were very time consuming and not many students registered, the reason is that a very small market share of the outstanding athletes did not need her help. Moreover, the training methods for running courses are always cram. What services should be concentrated in her business? Sometimes the things we like should be listed in additional services.

Step 2: Targeting new customers.

     We all know the saying, "time is money." customer time service will bring money. Time for monitoring and attracting customers will cost money. Clearly, the profitable business will use less time in activities than that do not bring money back.

     I once sat beside a consultant in the field of software on a flight to Atlanta. He complained that he was running out of time in traveling to his customers in Europe and everywhere in America. By doing so, he has no other choice and he felt he had to cast a big net in order to "grab" the new customers. However, I believe that there is another way spending less time and energy but still earning revenue. I advised him that he could improve his performance by aiming on new customers in smaller communities. This means marketing to the customers in narrower areas.

     I also suggest that entrepreneurs will take full advantages of time when they focus on customers in one or two specific industries. The benefits of orientation marketing are to achieve professionals in that industry. In turn, this leads to higher rate service fees which will reduce sales costs and increase revenue.

Step 3: In the hands of customers “stick like a leech"

     There are two types of customer you don’t want to serve: deferred and non-paid ones. Of course, no one is naive enough to think that all customers pay bills on time. The more time you wait for customers to pay, the more time and money you lose. I would advise you, please stop! Accountants may object to my comments on the principles of pre-recorded sales and turnover, but in my eyes, everything is meaningful only when I get ready money.

     The best way for service companies is to ask customers an advance deposit before selling or doing any job. Vendor will also reduce non-paid risks by unaccepting orders from the unknown and unfamiliar buyers. A trick of the well-known companies (but are in trouble) is to order lots of goods from the small eager companies which can do anything for sale.

    And my best advice without having to get help from the collection agencies is: if you can, please come to visit in person. Crafty customers can easily ignore the debt collection letter, but it will be difficult to ignore when facing with a friendly but resolute man.

     In conclusion, the best way to improve profitability is to stop producing unprofitable goods and time-consuming activities. You do not need to possess an MBA to become a big business. All you need is a wise selection of work you do, customer you serve, and get money back as fast as possible. You can do it.

 
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TERTICO JOINT STOCK COMPANY
Address: Suoi Dau Industrial Park - Cam Lam - Khanh Hoa
Tel: 058.3743529 - Fax: 058.3743529
Business license No.: ... - Responsible for the content: Mr Ho Si Khang