Value/Success/Profits #2: Knowing where your money comes from

In business by wakemanconsulting1 Comment

raffle-tickets

Back in the day, I was one of the most successful ticket brokers ever! And, that’s all the hyperbole I am going to give you about my days in tickets, but the really important lesson that I learned by working in tickets was about pricing and profit.

In the businesses that we are involved in, one of the challenges we often find ourselves dealing with is whether or not we are maximizing the profit we are making from each and every product or service we are selling.

Depending on what you are doing, it is important to look around and take in the landscape of what you are dealing with…especially when it comes to understanding whether or not you are really profiting from the things you think you are profiting from.

In too many cases, the relationship between size of sale and profit isn’t in the proper coordination.

That’s why this topic is so important.

If you are looking to maximize your ROI from your efforts, think about where the money is coming in and going out…

How high is your labor intensity? 

When you think about your work, are you thinking in term of maximizing your units of effort?

Probably not.

In the world of tickets, we often thought a big sale was great…but in too many instances, we found ourselves making big sales that had very little profit margin.

The reason could have been because of advertising costs, or time to close a sale, or any other number of reasons…but in the end, the sale wasn’t as profitable as we thought they were after we analyzed the real cost in labor, time, investment, etc.

As a smart business operator, you have to analyze the cost of each sale you make to ensure that each sale you make is generating the value that you need it to.

You want to maximize your investment of time to money earned.

How much time are you spending on generating new business?

One hidden cost you may not be paying attention to is how long it takes you to get new business.

You may also be spending tons of money on the different parts of your marketing efforts like advertising, events, and networking…to name a few.

You also need to factor into your costs, the amount of time you are spending on these business development efforts.

When you start combining the pieces, you can get a true cost for the effort it takes to generate new business.

Are your clients really buying what you are selling?

Finally, maybe you can look at your clients and ask a pretty simple question:

“Why do you choose to do business with us over someone else?”

A lot of times when you ask this question, you end up getting really interesting information…because you find that the reason that your clients hire you is often different than what you might have imagined.

So ask the question about why clients buy from you…

When you get the answer, you may find that the answer is different than what you thought it might be, but that the value that your clients gain from working with you is something that you can replicate and sell over and over, scalable.

In the end, your profit in business comes from maximizing the efforts you take and the sales that you make. You have to know that you are maximizing what you are doing. How do you do that, with analysis.

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  1. Pingback: Value/Success/Profits #2: Knowing where your money comes from | Wakeman Consulting Group

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