How to Increase Profitability – Part 1 of 2
In Part One, we will review how to define realistic profit goals and ways to manage expenses by covering the following topics:
- Budgeting for Profitability - Entrepreneurs often budget by taking last year's sales and increasing it by a few percent, if they budget at all. This section will take the traditional Revenue - Expenses = Profit equation and turn it around to make sure you are budgeting for profit first.
- Determining the Owner's Profit - Learn how to determine how much profit you should expect your business to generate and how to make sure it actually ends up in your pocket.
- Examining Operational Expenses - Entrepreneurs often pay attention to sales and little else. They expect extra sales to result in extra profit, but too often this does not happen. This section examines all categories of operational expense with a goal of significant overhead reduction.
- Examining Variable Expenses - We will perform a similar analysis of variable expenses to suggest ways to reduce them and increase gross profit. We will also look at the different impacts of operational versus variable expenses and why you should take steps to move expenses from one category into the other.