The Business Edge Blog

August 2, 2010

How to Make a Profit – Part 2

It may sound silly, but many business owners forget that they are in business to make a profit.  That means making money! 

 In Part 1 of this two part series, I talked about what a Profit Plan is and why the time spent developing one is worthwhile.  If you want to re-read Part 1, click here…..

Once your Profit Plan is pulled together, the real fun starts.  As I said in Part 1, it’s critical to get others in your organization involved so they can help with the execution of the plan.

One of the most important areas for you to focus is the top line (projected sales).  What is everyone in your business doing to bring customers in?  A couple of ideas on how to keep yourself and your organization focused on driving sales into your business:

  1. Have a Clear (Written) Goal for the Number of New Customers:  You have a Profit Plan that shows the total sales in terms of dollars you’d like your organization to bring in.  Now let’s break it down into the number of customers required to reach that number.  If you are targeting $100,000 in new business this year, where will it come from?  From one customer, from 1,000 customers, or some other number?
  2. Break Marketing Activities Into Monthly & Weekly Buckets:  Marketing drives sales.  All you can manage is what you and your people do – activities.  You can not control who and when someone will actually buy your products and services.  Once you have the number of new customers identified to meet your sales goal, the BIG question is, “What marketing activities will put you in front of those prospective customers so you can reach your goal”?  Marketing activities fall into three categories:  i) Short-Term – referrals, cold calls, direct mail.  ii) Long-Term (networking, writing, strategic alliances, and iii) Passive – print advertising, web sites, promotional products.  Once you’ve identified the strategies that work best for your business, the next step is to put a weekly schedule into place to drive those activities.
  3. Meet Regularly to Track Progress:  With so much time and effort going into developing the Profit Plan, I’m amazed at how many people will put the plan in their desk drawer and not look at it again to measure their progress against the plan.  I recommend you and your marketing/sales team meet on a weekly basis to track the execution of the marketing plan.   Is everyone doing what they agreed to do?  Are things working as planned or do changes need to be made?  While it’s easy to justify skipping the meetings when you “get busy”, I strongly advise my clients to continue with the meetings to keep the momentum going.
  4. Adjust the Plan Sooner Than Later:  Things almost never go as planned.  The biggest benefit of having a Profit Plan is to ensure that all the right discussions are happening within your organization and that all your key team members know what needs to be done.  Once you and your team get used to having the Plan, you’ll find yourself constantly tweaking the execution of the plan by what happens throughout the year.  If you get a fabulous response to a promotion that you had planned to only run occasionally, why wouldn’t you want to increase the number of times you plan on running it?

 

This discussion provides a framework for how to drive the top line of your Profit Plan.  Understanding that a plan needs to be constantly tweaked and challenged during execution is key to making a profit in your business.

Assignment:  Establish your top line goal for projected sales.  How many new customers will it take to reach the new sales volume?  Define weekly and monthly marketing activities you’ll do to attract those new customers:  Short-term, Long-term, Passive and Active.

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