I’ve been in the entrepreneurial advisor business for over a decade. In the past few years, I’ve also gotten into the business of coaching other entrepreneurs on how to achieve success in their own businesses. Recently, one of my clients dubbed me “The Profits Prophet” and it stuck. Why did this name resonate so much with me? Because it fits perfectly with what I always preach to my clients: profit is what you need to keep an eye on, and all those other numbers don’t really matter. Here’s what the Profits Prophet’s gospel means for you and your business.
What is the Profits Prophet’s Gospel?
My gospel is that entrepreneurs need to perform every action in their business with an eye to profit. Not revenue. Not cash flow. Profits. Why? Because profits are the only true measure of how your business is doing. If your revenue is high but your expenses are also high, you won’t have a successful business. Profit takes into consideration all factors either adding to or taking away from your viability and shows you in one simple figure how your business is doing.
Make Adjustments to How You Measure
So how do you know what your real profit number is? You need to measure correctly to get a clear picture. Accounting is simply translating your actions into numbers. You need to not only measure how much money you have in the bank after all expenses, but you also need to measure each activity and how much profit it is generating. This will help you ditch the activities that are a waste of time and capitalize on the ones that are increasing your bottom line.
Make Adjustments to Your Activities
To identify what is leading to profit, you first need to figure out what’s not. What busywork do you spend time on that drains you and doesn’t add to your bottom line? What activities suck your energy and give you a headache? Make a list, then find out how you can either eliminate these tasks altogether or delegate them to someone else. Now you can focus on adding more activities that lead to growth such as:
New ideas Has your business stagnated? If so, you may need some new ideas to break through the plateau. This might come in the form of new products or services, new pools of potential clients, or just new ways of thinking about your industry.
New salespeople Are your salespeople not cutting it? No one likes to do layoffs, especially in this environment, but effective salespeople are your gateway to profits. If you don’t have the right people on board, make adjustments now.
New strategies If you’ve not been running your business like a business, now is the time to make major changes. If you’ve been co-mingling funds, letting your business run you, or have very little free cash flow, you need to adjust your strategies.
New marketing efforts Do know which of your marketing efforts result in the best return on investment (ROI)? Do you keep doing the same old thing marketing-wise even though it isn’t leading to new business? Take this opportunity to pursue different marketing avenues that reach your target market and see how it affects your bottom line.
The end of the year is the perfect time to make adjustments to your business to ensure you start the new year off on the right foot. Are you ready to live the Profits Prophet’s gospel? Take my financial course for entrepreneurs to get started.