Path to Profitability (P2P) is the business plan that leads you to growth. Today’s entrepreneurs need a different strategy and that strategy is your path to profitability.
Today, businesses need to consider the future and learn how to generate profits for the long-term. So how can you achieve this? Here are some ideas to help you find your path to profitability.
Focus on Building Talent to Improve Outputs
Startups often begin as a one-person show. You, the owner, try to do it all. However, chances are you soon need to expand your team to reduce your workload. The challenge is finding people that will help improve your productivity. You want to hire the right talent who will provide the best ROI.
Evaluate what you need and focus on hiring people who generate revenue. Just like you consider the direct impact an investment in equipment, materials, or property for your business, you have to be highly selective when it comes to hiring your team.
So, we know you’ve been keeping your nose to the grindstone to get your business up and running. However, a common mistake business owners make is to continue to handle a lot of the fluff work on their own. You’ve hired a team or even a single person to help improve outputs, but how does that sharing of work look?
Make sure you don’t remain caught up in minutia when your place is out front, leading the charge. Leave the small tasks to new hires so you can focus on high value activities that help grow the business. Putting the appropriate systems in place will allow the business to perform to the standards your set initially. This allows motivated new hires to step up successfully so that you feel safe delegating to free up your valuable time.
Target Efficiencies, Then Do It Again
Your goal should be to constantly find efficiency gains. This is one of the best ways to maximize profitability. Finding better ways to do everything in your business adds value. Even a small saving of a few hundred dollars a month helps your business grow. Speak to an accounting coach or small business CPA and see where they can help.
Can they reduce banking fees? Is there a more affordable way to use credit? How’s that budget looking? Are you spending wisely?
Efficiencies reduce costs, but also make it easier for you to deliver your product/service which can also improve the customer experience. From reducing production steps to streamlining your sales funnel, each improvement adds up to an overall more efficient way of doing business and higher profitability. Start asking the questions.
Controlling costs helps grow your business, but profits require revenue. Whether you work on your own or have a sales team, optimized profits require scaling your revenue upwards.
While your goal will include generating higher value from each of your customers, creating a memorable customer experience is just as important. Why? Because repeat customers and customer loyalty create long-term revenue instead of just one-off sales. A business that can exist off referrals is even better, but you can’t achieve this without providing superior service.
Evaluate Pricing Strategies
Proper pricing allows you to turn a profit while not turning off customers who find your price tag too high. A consistent, appropriate price is far more effective than constant discounting that minimizes your gross margin. Discounting erodes clients trust and teaches clients to price shop.
Your path to profitability should optimize revenue while reducing costs. Your business strategy will leverage your resources, eliminate waste, and create an effective sales approach for the right target segments.
An Accounting Coach through our Business Compass Program can help you evaluate your path to profitability and help you form the habits and know-how to ensure you stay on the path in real-time. If you want to learn more about how our program brings Clarity, Control and Confidence to your financials contact us today for a Free 30-minute Introductory Call.
Visit our Entrepreneur’s Guide to Accounting for more articles to help you build the right foundation for your business financials.