January 17, 2012
You've likely heard it said that “what you measure you can manage” and “what gets managed gets done”. When it comes to achieving greater profitability, truer words can't be found. So, what the heck does that really mean and how do you get started?

We often talk to Arizona Business owners about the importance of focusing on 4 Profit Improvement Strategies or The 4 Ways To Grow Your Business. Simply, they are:

a) Increase the number of desirable customers,
b) Increase number of times each customer makes a purchase,
c) Increase the average amount they spend on each purchase, and
d)Improve the effectiveness of what you do.

These are the major areas that can be managed by measuring their impact on overall profits and the good news is they can be measured with relative ease.

Identify your Critical Success Factors (CSF’s) by asking three questions:

1) What are your most profitable products/customers and what makes them so profitable?
2) What resources are required to support your business?
3) What are the things that keep your customers coming back, recommending you and paying a good price for your product or service?

Once these questions are answered you should then plan on how you can monitor the effectiveness. For example recognizing your Key Performance Indicators (KPI’s) and placing more or less emphasis on each area depending on the trend.

At the end of the day a profit improvement plan is only effective if your return on investment (ROI), your net profit margin and your bank balance are improved simultaneously. Constant review and management of your CSF’s is the key to sustainable profit and ROI over the long term.

And that's exactly what our Financial Performance Reviews and Business Health Checks are designed to help you with.

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