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Profit Power: What a difference 5 percent makes

April 19, 2017 -  By

 

 

What if you could add 5 percent net profit to your bottom line, increase your personal income by 5 percent of sales or improve cash flow by a full 5 percentage points?

What kind of difference would that make in your business or life?

It’s worth asking yourself that question, because making that level of improvement is easier than you imagine.

In my experience, making a 5 percent improvement comes from improving one (or all) of the following four areas. I call these…

“The four jet engines of profit”

  1. Improving efficiency in operations.
  2. Reducing costs in overhead and cost of goods.
  3. Raising sales and improving sales mix.
  4. Increasing sales margins.

When I visit a company I inspect all four of these jet engines, looking for areas of improvement. I always find a mix of large, midsize and small opportunities, which add up to the gain in profitability the company seeks (when that’s the goal).

Often we boost profitability by tweaking just one “jet engine.” Case in point, a successful contractor I know, Richard Wynia, owner of LandArt Landscape Contractors in Beamsville, Ontario, emailed me last week saying he added 5 percent profit without having an increase in negative feedback.

“We are still booking jobs, and now at a 15 percent profit rather than the previous 10 percent,” he said.

How did he achieve this?

Qualifying leads more thoroughly by doing the following.

  • Meeting fewer prospects, while raising his total sales;
  • Wasting less time with tire kickers;
  • Following a daily and weekly schedule of meetings to keep all his employees on the same page;
  • Keeping his entire team focused to the new vision and target client; and
  • Taking other proactive steps too numerous to mention in this short blog.

This contractor has been able to initiate and stick to these changes through a more intentional approach to business each day. If his business were a bus, he would be clearly in the driver’s seat.

Which seat are you in?

Driver’s Seat: Intentional, looking ahead, and proactively steering the bus.
Front Row: Wishful planning, shouting instructions, but not in control.
Back Row: Looking out the rear window, watching the dirt fly off the rear wheels.

Which seat would you like to be in?

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About the Author:

Jeffrey Scott, MBA, author, specializes in growth and profit maximization in the Green Industry. His expertise is rooted in his personal success, growing his own company into a $10 million enterprise. Now, he facilitates the Leader’s Edge peer group for landscape business owners—members achieve a 27 percent profit increase in their first year. To learn more visit www.GetTheLeadersEdge.com.

1 Comment on "Profit Power: What a difference 5 percent makes"

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  1. Debbie Neese says:

    Jeffrey: This is a great example! I had a similar experience with a client. Putting more directives in place as to ‘what kind of client’ he was looking for and what kind of specific jobs he wanted to go after, gave direction to the qualifying. With stricter boundaries in place, he was able to graduate to the next level in his business without working more hours. I’ll keep this article in my Evernote file to share with clients! Thanks!