Mindset Shift & Business Money Mindset Improvement

Mindset Shift & Business Money Mindset Improvement

BUSINESS MONEY MINDSET SHIFT

Part 2 of the series “6 Quick Ways to Improve Your Business Money Mindset”

 In the first part of this business money mindset series, we looked at a couple of typically personal elements of where a mindset shift is often required.

Money mindset mastery is a key part of the puzzle when looking to create business success. Getting your mindset right when building wealth relies on you having both your business mindset and commercial mindset ‘in the zone’ and fully focused on the business growth non-negotiable of making profit. That means that for many of us, we need to embrace a mindset shift so that we feel comfortable with money.

Mindset issues we looked at in part 1 covered:

  • Why we need a growth mindset to promote mindset development when it comes to addressing the financial needs of your business {PS – remember: your business relies on you}
  • Why when we have a simple framework to work to, it is easy to create the mindset shift that we need when it comes to making a profit intentionally
  • Why a positive mindset shift occurs when we realise that we don’t have to understand all of the numbers in our business, or how they were put together

Let’s now look into the next two business money mindset issues, and think about how we can create the mindset shift that is required.

Number 3: You and Your Business Money Mindset –

“Break. It. Down.”

Mindset issue number 3 is all about the feeling of being overwhelmed (which tends to create a negative mindset) by trying to answer a business finance question that is ‘too big’, but it seems like the right question to ask.

The question:

“How do I make more profit?”

Trying to answer a question that is ‘too big’ is generally indicative of not knowing where to start, and consequently not having a structured plan because you don’t know how to break down the ‘big question’. It presents itself effectively as not understanding the wider subject, which consequently leads to feelings of overwhelm (at least to some degree) and maybe even inadequacy (more negative mindset feelings). Sounds a lot like that ‘fixed mindset’, doesn’t it?

This then typically leads to inefficient and irrational behaviour which is generally followed by a negative feeling around the subject as a whole, which often manifests itself as “I don’t understand any of this”…and a deepening of a negative mindset ensues…

Self-recognition

Do you recognise any of those patterns and symptoms when thinking about finance in your business? If you do, you’re not alone – far from it. The upside however, is to remember that you have your own zone of genius too (positive mindset time) – by definition we have to accept that we can’t all be good at everything. There’s nothing wrong with not being a ‘numbers’ or ‘finance’ person first and foremost, but as the CEO in your business, we do need to get you into a positive mindset space and create the mindset shift around 2 things:

  • That it is ok to not know everything about numbers (less pressure to be an expert in this area means a more positive business mindset overall)
  • That you do need to take responsibility for knowing how to make a profit in your business (accepting the overall responsibility of being a CEO means an improved leadership mindset)

That just means having a framework that you can relate directly to the process of making a profit with ease and simplicity, ie a simple framework to depend upon in the first place {PS – I’ve lost count of the number of ‘freebie’ downloads I’ve taken in for a ‘formula for this’ or a ‘formula for that’ – some of which I have used, some of which I have adapted to suit me over time, and with experience – the point is we have to start somewhere and wilfully engage with the topic}.

So, let’s get back to that question – the one that all business owners and entrepreneurs feel compelled to answer day in, day out – “How do I make more profit?”

A quick task for you right now – stop reading and grab a piece of paper, or open Notes on your phone – whatever you have to hand, and jot down the first 3 to 5 things that come to mind for you when answering that question…

OK – got your list? Great… {You can post them in the comments below – I’d love to see what you came up with!}

Here’s the thing – every single person reading this who has written down or thought through a list will probably have a list that could be wildly different to the next person.

How Do I Make More Profit?

Here’s the reality:

There are a ton of ways to make more profit. The key is focusing on the right options that are in context for you and your business – and having a framework on which to focus on in the first place.

For those of you that did actually stop and write your list down (I know there’s plenty who will have ‘read ahead’ looking for the answer without doing the work 😉), I suspect that you have written down what effectively amounts to ‘tactics’, ie ‘sell more widgets’, ‘spend less on office stationery’ etc.

It is also likely that everything that you have written down will be valid, have merit and be a part of a bigger plan – but as you can probably see from your list, it has more than likely been curated randomly – ie you wrote down the first things that came to mind, followed by the next thing and the next thing…and as a result, you have  a pretty eclectic list with not much structure attached to it.

If that’s you, then know that you won’t be the only one! This has happened because you have tried to answer ‘the big question’ all in one go, and not focused in a more structured manner on some specific higher level strategic ideas, which can then be broken down into tactical actions – because you haven’t found a suitable structure to work against…yet (go grab that download here – it will get you started for sure).

To make the process more efficient therefore, we need to channel that energy and desire for growing profitability into some smaller building blocks to make the task:

  • More manageable
  • More focused
  • More achievable (with less unnecessary effort, ie greater efficiency)

We need to focus on the right things that will actually make a difference, rather than trying to do #allthethings in the hope we’re doing the right things that will improve our profitability.

[ctt template=”11″ link=”z3TMY” via=”yes” ]We need to focus on the right things that will actually make a difference, rather than trying to do #allthethings in the hope we’re doing the right things that will improve our profitability.[/ctt]

Break It Down

Think about it like this – I’m sure you’ve heard this analogy before – “How do you eat an elephant?”

The answer…One bite at a time…

It is just the same with profit – how do you make more profit? By getting clear focus on the only 3 things that will ever influence your profitability – sales, margin and overhead.

I’ll repeat that for you:

  • Sales
  • Margin
  • Overhead (Expenses)

Now we just need to apply the structured thinking around each element – create a separate strategy for each that is in context to how your business operates and functions, and then list the tactical actions that will help you to deliver the strategy. It’s no different to how you probably plan out your marketing campaigns, right? It’s just about applying that planning skill to a different business discipline.

Make sure you grab the download below, and you’ll see just how easy it is to create a more structured answer to the question “How do I make more profit?”

So, despite the fact that there are a *million* ways to make a bigger profit, you’ll see that the strategic principles that underpin the answer to the question can be boiled down into one simple concept which can be applied to any business (including yours, guaranteed), regardless of where the business is geographically based, whether it operates online or from premises, whether it is service or product based, and regardless of the size of the business – be that trying to get your first 6 figure year under your belt, or whether you’re aiming for 7 figures plus doesn’t matter – the framework is exactly the same and the technique can be applied in the same way.

 

Number 4: You and Your Business Money Mindset –

“The money in your business doesn’t belong to you”

Business money mindset issue number 4 is all about the conflict between personal and business money, and why the money in your business doesn’t all belong to you…

So that’s a disappointment isn’t it – “The money in your business doesn’t belong to you”. Makes you wonder who you’re doing it for then really, doesn’t it…

Separate yourself from your business

Yes – you are doing it for you (and all of those great clients that you’re positively impacting of course), but the mindset shift that we need to create is one where you learn to separate yourself as a private individual from your business.

So, first and foremost:

The money in your business belongs to your business. You need to detach yourself from it, and yet create a bridge to it.

[ctt template=”11″ link=”gbjt1″ via=”yes” ]The money in your business belongs to your business[/ctt]

mindset shift bridge

Sounds obvious, I know – but this is likely to be a mindset shift for anyone in the early stages of their business, or who has been carrying on a side-hustle alongside their regular job where it was ‘all just money going into the pot’. The original objective may have been just to ‘earn something extra’ to clear down personal debt for example.

This may also be a mindset shift for anyone who is growing a business where there has always been ‘sufficient cash’ to draw upon up to this point, but now the business is consuming cash as it grows – this just means that we have to start acting more like business owners looking for capital growth, not just looking for short term income.

Think bigger

If you’re struggling with that idea, think about what it would be like if your business was 100 times bigger than it is now – you’d be thinking about the business, not yourself, wouldn’t you? Mindset development relies on being able to detach ourselves from what is right in front of us and apply a new mindset approach.

Positive mindset time – you need to take that mental leap now…

  • So, the tip here is to start thinking bigger about your business – stop thinking about your business servicing your own personal financial needs.
  • Get the big picture right, [ctt template=”11″ link=”CTni4″ via=”yes” ]Focus on building a business where you are intentional about the level of profitability that you want, and the personal side of finance will look after itself[/ctt]

 

The Business comes before You

Thinking about your business as being a personal income generating machine is clouding your judgement (you’re thinking about it like an individual income, not like a business #realtalk), and the emphasis is on the wrong place and on the wrong things. Business success relies on creating a profitable business model first and foremost – then look to that to provide you with your income, not the other way around. That’s mindset development in action – putting your business before yourself.

When you start out as a new business owner, it’s all about ‘earning the income’ for sure and covering your essential personal costs – rent / mortgage / food / car etc. Maybe you left a corporate job and you know you used to maintain a lifestyle based on a salary – and you’re understandably desperate to cover that off as soon as possible again. It is no coincidence that the ‘first financial aim’ for most people as they set off into the entrepreneurial world is to earn their corporate salary working for themselves. It’s good for the soul and a positive mindset after all – validates the reason you left, doesn’t it?

You knew you had it in you to make more for yourself in money terms, rather than just making more for everyone else. The ‘salary matching mindset’ will only get you so far though because it represents a personal mindset, not a business mindset in operation because you’re still thinking about it as if all the money belongs to you.

You need to transition to a more commercial mindset with far bigger goals than that – you will necessarily incur additional expenses as you grow and you need to allow for that so get that into your business mindset now, because it will stand you in great stead in time.

Why the money doesn’t belong to you

Even if you are just starting out on your entrepreneurial journey, it is important that understand why the money doesn’t all belong to you – there are a couple of simple categories to consider here, dependent upon whether your business is service or product based, and ultimately what your overall business model looks like:

They can be summarised as:

  • Direct Costs (also referred to as ‘Cost of Goods Sold’)
  • Expenses (also referred to as ‘overheads’)
  • Taxes

In all of the above instances, when you get paid by your client, you are effectively collecting money on behalf of your suppliers, labour force (employed or sub-contracted) and the tax collecting authorities. You may not have to pay these people immediately, and so the money may well sit in your bank account for a while – that doesn’t mean the money belongs to you, you are just the temporary guardian of it for all of those other people.

Disappointing I know…but that’s running a business for you.

The irony of it all if you have now left the corporate world behind? You’re now an employee within your own business…

Action points:

  • transition from an ‘it’s my money’ style mindset to ‘my business generates money…and I have to ask my business to pay me for what I bring to it’ style mindset. In this respect, you work for your business, not the other way around.
  • Be accountable to yourself – [ctt template=”11″ link=”u9tFR” via=”yes” ]Make such a success of your business in profit terms that you never have to think about your personal financial circumstances ever again[/ctt]
  • Create a ‘flow’ of money from your business to you in a structured way – the flow derives from money entering the business first, and the business then releasing money to you. You need to see this as two separate transactions, not just one where the money your client pays comes straight to you.

 

Business Finance to Personal Finance Venn Diagram - Mindset Shift

If you look after yourself first, then your business will suffer or more than likely, fail to grow – at the very least you will starve it of the working capital that it needs to be nurtured and positioned for growth. Give it the best opportunity to grow – don’t starve it. Work it hard to make sure that you don’t starve yourself!

Business finance and personal finance are undoubtedly linked, but it is important that you understand that money belongs to your business first now – then you can take your share. Focus hard on the profitability of your business first, do the work, and the personal financial side of things will take care of itself.

 

Here’s A Download Link to help you with the simple profitability system details –

The #profitlevers system – how to an earn an efficient profit, simply: http://bit.ly/improveprofitabilityweb

 

Related Articles:

Business Money Mindset Improvement (Part 1)

How To Increase Profit In Your Business In 3 Easy Steps

Here’s to focusing on business money mindset mastery!
Jason

 

Jason A WithersHi there Profit Seeker, I’m Jason!

I help online entrepreneurs and owner managed brick & mortar companies to build profitable businesses through the application of easy to understand business strategies.

I show you how to apply and implement the strategies, take the ‘fear’ out of the numbers and help you to become more confident about the financial aspects of your business that you really need to know about.

That means less stress for you so that you can focus on making the impact that you want to make with your clients and customers, safe in the knowledge that you know how to make your business more profitable for ever more.

You can run a very profitable business with ease and simplicity. I’m here to help you make it happen and keep you accountable to your goals, providing commercial and financial support and advice to help you on your way.

Learn more about the great work we can do together here:

https://jasonawithers.com

Or you can book a call here:

https://jasonawithers.com/schedule-a-call/

 

 

Business Money Mindset Improvement (Part 1)

Business Money Mindset Improvement (Part 1)

6 QUICK WAYS TO IMPROVE YOUR BUSINESS MONEY MINDSET – Part 1

Business money mindset mastery is a key part of the puzzle when looking to create business success. Getting your mindset right when building wealth relies on you having both your business mindset and commercial mindset ‘in the zone’ and fully focused on the business growth non-negotiable of making profit. That means you need to feel comfortable with money and create an ‘abundance mindset’. It is all too common for many new entrepreneurs to suffer from a ‘scarcity’ or ‘lack’ mindset’ – maybe that’s you right now? In this two part series, we’re going to look at 6 ways that we can become more comfortable around money and the business of making profit – and enjoying it with confidence and ease.

business money mindset

Mindset definition

Let’s start by defining what we mean by ‘mindset’ here:

Carol Dweck (Professor of Psychology at Stanford University), noted that she perceived two categories of mindset that allowed grouping of individuals according to their behaviour, especially in relation to how they handled failure:

  • Fixed Mindset – abilities are believed innate and failure associated with belief that failure is associated with a lack of necessary abilities
  • Growth Mindset – provided an individual invests study or effort, individuals believe that they can acquire any given ability.

Dweck contended that those living and operating with a growth mindset, will tend to live a less stressful and more successful life.

All of our discussion points below in both this blog, and the second part are predicated on a fundamental belief in the necessity to adopt Dweck’s ‘Growth Mindset’ in the entrepreneurial world of the business owner.

Number 1: You and Your Business Money Mindset

This introductory mindset issue is all about you – the 4th #profitlever (You’ll hear more about #profitlevers 1 to 3 shortly). You are the key to success that you are looking for. Sounds obvious doesn’t it?

[ctt template=”11″ link=”1H3N4″ via=”yes” ]You are the key to the success you’re looking for.[/ctt]

When it comes to running a successful business as business owners and entrepreneurs we feel the day to day pressure of feeling that we need to be good at everything. Some business disciplines we feel more confident about – marketing or sales for example, and this may well relate to our past business experience or training. It is not very often however, that we come into business feeling assured about the ‘money’ side of it, the ‘business finance’ piece (that’s why we have an accountant, right?).

Consequently we can tend to feel:

  • Inadequate when it comes to discussing money
  • Stressed about going to see our accountant (often accompanied by a feeling of inferiority)
  • Unsure of what we need to do when it comes to working out how to make more profit
So here’s what we need to help with the mindset shift:
  • A simple to understand framework to help us understand how to make an efficient profit

Imagine how that would ease a large part of our negative mindset about money – actually having a framework to work to! A simple way to understand how to make more money becomes a confidence based mindset shift that you can benefit from quickly.

So let’s get back to those first 3 #profitlevers:

They are the cornerstones of the super simple to understand technique about how to improve profitability in your business that I use – indeed they are the ONLY 3 things that will ever help you grow your bottom line – you can find out about them from the download link below this post (or grab the download here), and get started working on those straight away. The framework has been specifically created in a way to help ‘non-financial’ business owners develop a stronger money mindset whilst encouraging personal growth in a probably unfamiliar financial world.

[ctt template=”11″ link=”5dp8r” via=”yes” ]The framework has been specifically created in a way to help ‘non-financial’ business owners develop a stronger money mindset whilst encouraging personal growth in a probably unfamiliar financial world. [/ctt]

But why are you the ‘4th #profitlever’?

Because the other 3 won’t be effective all on their own – they need you to take action and focus on each one strategically – the profit producing magic won’t happen without you! {No such thing as a free lunch!}

The process for making an efficient profit is simple, but it cannot work without any input or direction from you. Mindset development requires continual (re)affirmation – and it takes inner strength. But I know that you have that inner strength as an entrepreneurial business owner – you wouldn’t be where you are right now if you weren’t.

business money mindset

Believe In Yourself

You have to believe in yourself first and foremost, just like you believe in your business. Your business money mindset is a skill to be developed, just like your business will develop (and just like you have learned and developed other new skills already in your entrepreneurial journey so far):

  • Your business money mindset and business both need pushing – by you
  • Your business money mindset and business both need nurture and care – from you
  • Your business money mindset and business both need regular attention – as they are both part of you.

So you’re the 4th #profitlever – you have to do the work – you know this as an entrepreneur and business owner – you need to take action, because no-one else will do it for you.

Make the personal commitment to yourself now – if you are to create profit with ease, and consequently earn more money – don’t move on until you acknowledge and embrace the idea that your future profitability and financial success all hinges upon you taking action and developing your business money mindset. Strength and belief from within is required.

Take the action now so that you can control and be laser focused about how to make profit in your business in the most efficient way possible.

Based on the actions that you have taken to date, you are exactly where you are meant to be. Now it is time to step it up a level and commit to a new future in your business with a new mindset around money.

Remember though – there is a support network available to meet you half-way, and more than willing to do so when you are committed to your path of growth and change.

But it has to start with YOU!

Number 2: You and Your Business Money Mindset –

“I’m not a numbers person”

This second business money mindset issue is all about the temptation to hide behind the phrase “I’m not a numbers person” as a reason for avoiding our business finances…and yet we still see ourselves as the CEO of our business despite the fact that we are turning a blind eye to one of the most fundamental of business disciplines.

So we need to start with the myth itself – “I’m not a numbers person”:

It manifests itself with thoughts about ‘not being good at maths’, and the internal diversion and excuse of ‘my accountant does that’.

Let’s get this straight – you don’t need to be good at maths. When it come to the business of making profit, you just need to be able to grasp a simple concept and apply it to your business (grab the download here or at the end of this post which will explain it).

What are you looking for in your ‘numbers’?

As a business owner you are looking for a couple for things from your business numbers – insights and impact. That doesn’t mean you need to know ‘how to put them together’. This is business money mindset development in action – understanding that it is not your job to know everything about bookkeeping and accounting technicalities.

[ctt template=”11″ link=”1QN10″ via=”yes” ]As a business owner you are looking for a couple for things from your business numbers – insights and impact. That doesn’t mean you need to know ‘how to put them together’. [/ctt]

Think about it this way:

If you’re in the online entrepreneur space, I bet you’ve managed to work out a bunch of things on social media over the last couple of years (including aspects of the tech) from a standing start – maybe even designed and built your own website along the way.

If you have managed to do that, you can apply that positive mindset to learning what you need to know to take control of profit in your business. Not only that – I can pretty much guarantee that you know more than you actually think you do already – just because you don’t use the same language as your accountant doesn’t mean you don’t know anything. You are just running more on ‘instinct’ at the moment (you’re just missing a reliable framework to help you focus on the right things – check out the download below (or here) for more on that).

So now it’s tough love time:

You may not think of yourself as being a ’numbers person’, but you are a business owner, be that online entrepreneur or brick and mortar based – and the reality is that numbers are going to be an inevitable part of your future, for better or worse. So the key to success is money mindset development (see point 1 above).

Being a CEO

So let me ask you this:

Do you think that the CEO in a corporate is the best sales person, marketer, financial person, people person, production guru or organiser? No – of course they’re not. They may well have a background and a bias towards one core business discipline, and they well be more well versed in the depth of one subject compared to another.

But, here ‘s the thing though for those CEO’s who aren’t ‘numbers people’ first and foremost – they can’t avoid the numbers – they need processes and systems in place to make sure they get the numbers that they do need, and learn to utilise those numbers. That doesn’t mean they need to understand ALL the numbers – they just need to understand the parts that they need to drive profitability in their business.

business money mindset

The myth re-visited

So let’s return to the myth, and I’m going to flip it on myself for you:

Just as you don’t have to be a numbers person first and foremost – likewise, for myself, it doesn’t mean I get to avoid ‘everything marketing’.

Take for example the following:

Do I understand everything about pixels, re-targeting, SEO, video production and copywriting? Of course not – my ‘zone of genius’ lies elsewhere, but I’m not hiding from these things.

Do I have an open mind and a positive mindset when it comes to embracing the overall discipline of marketing in my business? It’s a non-negotiable for me – it is required in order to progress. Have I been and am I spending money on improving my skills – definitely.

Am I prepared to work on mindset development in this area of business. You bet! Because I know it forms part of my future and I can’t afford to ignore it.

It’s just the same for you, but the inverse scenario I suspect between finance and marketing – it is more a question of committing to the mindset shift of being prepared to understand the most important part of running a business – the business non-negotiable of making a profit.

Now you don’t need to know how to do all of the technical accounting and bookkeeping things to know how to make a profit. Your mindset development task here is to commit to understanding the concept behind 2 simple images – neither of which contains a single number! {PS – I bet your accountant has never told you that was possible!}

8 words show you all you need to grasp, and I know that if you’re running your own business, you can definitely handle 8 words that will set the profitability path for you for evermore. Your business success is built on this principle – develop your mindset to let the concept in. Remember that ‘growth mindset’ definition in the introduction? This is the time for it.

You can find the link to those 2 images and the concept behind them in the link below this post or right here.

Like most things in business life, the key is taking action. It is also about taking responsibility. So you can decide to either carry on as you are thinking that you’re not a ‘numbers person’ (‘fixed mindset’) or you can take responsibility as the CEO in your business and open your mind to receiving the knowledge that improving your profitability starts with the simplest of concepts and 8 words (and by the way, one of them is repeated, so it’s only really 7 words…easier already, you see….)

Business money mindset mastery says that insight and impact in your business numbers may come to you in a more comfortable format than you think. It is your job as the CEO in your business to find the number interpretations that make sense to you (you can talk to your bookkeeper or accountant about this, or book a call in with me below if you’d like some help with this) – that may not be a table of data in a spreadsheet – a graph can tell a simple numbers story too…you want to make more money? Develop your business mindset to create space for money mindset development too then.

Business Money Mindset Improvement – Conclusion (Part 1)

 

In part 1 of this business money mindset series we identified three mindset issues that that can hold us back in our search for greater business success and our desire to earn more money. We have seen that this is largely due to not having:

  • perceived depth of experience when it comes to business finance (remember though – you know more than you think already!)
  • a perception that we have to know everything about our numbers (including bookkeeping and accounting technicalities)

We have seen that fundamentally we need to be prepared to adopt more of a ‘growth mindset’ across all business disciplines. We have to start the mindset development work in order to take responsibility more fully for our businesses overall (as CEO’s, that is our job!).

I’d love to know which of the business money mindset issues you feel you identify with the most and why in the comments below:

  • Is it about the need to engage more fully across all business disciplines?
  • Is it about a ‘fear of numbers’ generally?
  • Is it about not having a clear plan for understanding how to make a more efficient profit?

I’m here to support you through that journey, but remember it has to start with you. If you’re prepared to start addressing these things, I’m prepared to meet you more than half-way to help you conquer the issue 😊

  • Click here to sign up to make sure you receive future posts about how to make your business more profitable.

In parts 2 and 3 of this business money mindset series, we’ll be looking at:

  • Why the money in your business doesn’t belong to you…yet
  • How ‘Profit Gives You Choices’
  • Why we need to be deliberate about the profit that we (want to) make

Here’s the Download Link –

The #profitlevers system – how to an earn an efficient profit, simply: http://bit.ly/improveprofitabilityweb

 

Related Article:

How To Increase Profit In Your Business In 3 Easy Steps

Here’s to focusing on business money mindset mastery!
Jason

 

Jason A WithersHi there Profit Seeker, I’m Jason!

I help online entrepreneurs and owner managed brick & mortar companies to build profitable businesses through the application of easy to understand business strategies.

I show you how to apply and implement the strategies, take the ‘fear’ out of the numbers and help you to become more confident about the financial aspects of your business that you really need to know about.

That means less stress for you so that you can focus on making the impact that you want to make with your clients and customers, safe in the knowledge that you know how to make your business more profitable for ever more.

You can run a very profitable business with ease and simplicity. I’m here to help you make it happen and keep you accountable to your goals, providing commercial and financial support and advice to help you on your way.

Learn more about the great work we can do together here:

https://jasonawithers.com

Or you can book a call here:

https://jasonawithers.com/schedule-a-call/

Prosecco and Jam Doughnuts

Prosecco and Jam Doughnuts

Profit, Prosecco and Jam Doughnuts, and a Plan

Do you prefer using the carrot or the stick? What about if you are the only one in your business – how can you sensibly apply a ‘carrot and stick’ approach to yourself? Either way, you’ve got to set some performance benchmarks for yourself – either as a solo entrepreneur or as a brick and mortar business owner. But how do you hold yourself accountable to those goals? How do you set about rewarding yourself? Do you just ‘carry on’ oblivious to the sense of achievement?

I have found that external input tends to increase accountability to oneself – the fact is, it is just harder to say ‘I didn’t have time’, or ‘xyz excuse’ stopped me from doing this.

I love seeing the sense of achievement in my clients. For those that have truly invested themselves and their teams (if they have one) into growing their business in a sustainable and efficient way, I believe that they should be rewarded. By me.

The First Quarter

We’d initially set the simplest of benchmarks – outperform against the previous year. Historic data was ‘thin’, but we could track some simple metrics – sales, gross profit and net profit. After all, these were essentially the three headline figures that we needed to monitor as the business grew.

So here’s the comparison of performance for the first quarter:

2015-16 (Q1) 2016-17 (Q1) + / – + / – %
Sales 42.1 57.6 + 15.5 + 37%
Gross Profit 23.0 38.1 + 15.1 + 66%
Gross Margin 54.6% 66.1%
Net Profit 5.6 20.4 + 14.8 + 264%
Net Margin 13.3% 35.4%

Now, this is a relatively small company (turnover was around £180k ($250k) in 2015-16) but it demonstrates what is possible when you have a plan and are determined to improve your business. We worked through the sales, margin, overhead model and applied it. What is more remarkable however is the huge increase in efficiency – the increase in revenue is almost exactly the same as the increase in gross profit and net profit – that effectively means that almost every extra dollar of the sale went straight to the bottom line.

Focusing on the only 3 things that will ever improve your profitability was the driver for this. Specific tactical actions and processes created the result.

So Prosecco and jam doughnuts were the rewards for the business owners. It may not seem like much (especially when you find out it was only half a bottle of Prosecco!), but it symbolises the need for celebration for achieving goals and outperforming against benchmarks that were set. The reward came with an explanation and a promise – that it was only half a bottle because performance had only been measured over one quarter – it wasn’t consistent outperformance yet. The promise was that the prosecco would be upgraded in time if the whole year created a consistent proof.

So here’s what happened for the full year:

2015-16 (Q1-4) 2016-17 (Q1-4) + / – + / – %
Sales 181.0 251.9 + 70.9 + 39%
Gross Profit 77.7 142.3 + 64.6 + 83%
Gross Margin 42.9% 56.5%
Net Profit 14.2 57.9 + 43.7 + 307%
Net Margin 7.8% 23.0%

When you see results like this…why would anyone not want to celebrate. Besides it sets everyone up in a positive frame of mind for the meeting ahead, and whatever is next.

For a business that produces (manufactures) an end product and incurs third-party costs in order to make that product, that is a fabulous example of concentrating on making sure that the increase in revenue is profitable revenue – again, almost all of the additional revenue has dropped through to the gross profit level. The increase in net profit, however, hadn’t kept pace with this statistic because of two things which occurred in the second half of the year – the introduction of a general manager role (who also had a sales and business development background – great for the set up for growth in the following year), and an extra member of staff on the production side of the business, plus some additional salary awarded to the business owners at the year end in recognition of their most profitable year ever (and tax deductible for the business!)

The Prosecco was upgraded to Champagne for the business owners, and all of the staff received Prosecco as well…along with more jam doughnuts.

All too often we don’t celebrate. And we should. It’s a bit like saying ‘thank you’ to your staff or team (internal or external) – we should do it more often than we do.