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How to make a profit
You’ve started your own business – now how will you make money?
You hear some success stories about new businesses instantly making tons of money, but the reality is often much different. It usually takes years for new companies to make a profit – and that’s if they’re able to stay open at all. If you’ve recently started a business, you’ve hopefully planned for this delay in income; however, you’re also eager to start bringing in more money. After all, this is one of the reasons why you’ve decided to become an entrepreneur in the first place.
Are you wondering how to make a profit in business? First, you need to understand what it really means to make a profit. The money you bring into your company is considered revenue – and you don’t get to put all of that in the bank. Once you pay for costs including payroll, taxes, supplies and other expenses, what’s left over is your profit margin. This is the real number that will determine if you stay in business, experience explosive growth or have to close your doors.
How to make a profit in business
While there’s no magic way to generate cash and make a profit, there are some things you can do to steadily improve your financial growth.
1. Think in terms of incremental growth
With any new venture, it’s easy to start thinking about the end goal. Today, you’re opening your business; tomorrow, you want to make $10 million. If you think this way – in terms of massive growth from the get-go – you’ll miss out on opportunities along the way and quickly become overwhelmed. Instead of regularly thinking about where you want to be long term, create a business map that allows you to think of incremental growth and a steady plan to increase profit. What can you do today, this week or this month to start improving your quality of profit ratio? Working with a business coach can be an invaluable tool in this stage as they’ve helped countless other entrepreneurs identify how to make a profit with a plan that is sustainable and scalable.
2. Identify what’s holding you back
When looking for ways to make a profit, you must take an objective look at your entire organization. What’s currently preventing you from making the money you know you’re capable of earning? Is it a lack of viable leadership skills? Is it a problem with your sales team? Have you not spent enough time getting the word out about your brand? The problem could also be something within you: Are you emotionally holding on to something that’s limiting your company’s growth? Have you held on to limiting beliefs? Once you’ve identified what is holding you back from your plan to increase profit, you can seek out the personal or professional tools needed to break through your barriers.
3. Decide where you can drive growth
Growth and how to make a profit go hand in hand. If lack of growth is a problem within your sales team, think about how you can improve it. Do you need to hire fresh talent? Do you need to offer more incentives or make changes to the company culture to turn your team into raving fans of the business? Who supports you 100%? Who not only knows the company inside and out, but can also rally the troops and bring in new customers? When you assemble a team of people who are excited to work for your brand and spread the message, it becomes much easier to be successful.
If the problem is not within your team, it could be your product or the way you’re marketing it that’s not connecting with your target market. Once you’ve identified the areas in your business where you can optimize growth, you can be strategic about making impactful changes.
4. Focus on strategic innovation
There aren’t many companies who can say they honestly offer their customers something brand new. Those that do are true disruptors, but that doesn’t mean you have to be that type of company to increase profit. At this point, successful businesses expand on existing ideas, but they do it in a way that’s useful and appealing to their customers. In other words, they strategically innovate. To do this, you need to identify who your customer really is and why they need your product or service.
An example of a strategic innovator is Netflix. Before the streaming service came along, people were happy to rent tapes at Blockbuster. Netflix saw how they could capitalize on this need for home entertainment, and found a way to make movies even more accessible for their target audience. Netflix not only found a way to make a profit, but also a way to change the entire entertainment industry. If you’re able to do this, you’ll be leagues ahead of your competitors and can expect your profit margins to rise accordingly.
5. Add real value for your customers.
Adding real value is a pivotal component of understanding how to make a profit. The bottom line of a successful business isn’t actually a number – it’s the value customers perceive in the business’ product. When someone finds a product that fills a need they can’t find anywhere else, they fall in love. How do you truly add value your ideal customer can’t ignore? Prioritize your market research to understand your customer’s lifestyle and taste. By inhabiting your customer’s mind and preferences, you’re able to create compelling innovations customized to your market. As you innovate, track how your buyer responds so you can adjust your strategy as needed.
6. Leverage your connections.
Running a profitable business requires far more than just number-crunching and managerial savvy. Like most of life, business success hinges on many factors, and building connections is one of them. Look at your network not as a collection of individuals, but as a collection of strategic alliances. Build relationships with complementary businesses in your industry, and consider partnering with them for referrals. By learning to leverage your connections, you increase your scope and ability to make a profit.
7. Customize your customer engagement strategies.
Understanding how to make a profit means taking a close look at how you’re engaging your target market. There is no one-size-fits-all sales or marketing strategy, and you must customize yours to fit your product and clientele. Given modern technology and the popularity of social media, for many products, outreach is about immediacy. Engage your target market digitally through your website and social media so they can easily access and learn about your product. You might consider adding interactive tools like webinars and demos to attract customers. To make a profit, think outside the box about your product. You might try cross-selling (providing new products or services that complement your existing ones, like a gym selling supplements), or adopting a sales model that creates returning customers (e.g. monthly service plans or bulk discounts). Whatever approach you take, measure your results to determine what tactics are working and which ones aren’t.
8. Make an action plan
Once you’ve figured out what’s holding you back, how to grow and how to strategically innovate, it’s time to get to work and make your plan for how to make a profit. Create a timeline and develop a series of steps you and your team will take to increase profit margin. Set reasonable goals that you can sustain over time. Make a massive action plan that will help you jumpstart growth and increase profit at your business. Maybe this involves creating a new department, launching a new marketing campaign or undergoing leadership training so you’re better equipped to lead your company. Whatever you need to do, make sure it’s included in your plan and that you have concrete, achievable goals for your company.
9. Track your progress
Just because you’ve created an action plan doesn’t mean your choices are set in stone. Monitor your results as your plan progresses. Have you figured out how to make a profit in a sustainable way? Have you found an effective group of people to work as part of your team? Set times that you’ll check in and reevaluate your progress. Maybe this is a monthly thing, or perhaps you check in every three or six months to monitor growth.
With enough insight and planning, you can make a profit in your company and make it talkably different. Tony Robbins is the world’s #1 life and business strategist, and has launched a number of successful business ventures himself. Whether you’re looking for ways to increase your business’ profits or want to learn more about how to do away with limiting beliefs in business, attend Business Mastery. The five-day event will expose you to incredible speakers and teach you key strategies to help your business thrive.