Page 9 - KZN Buisiness Sense - Page One - Susan Abro

PROFIT FIRST? NO. PROFIT ALWAYS.

WHY SMART BUSINESS OWNERS OBSESS OVER MARGIN, NOT REVENUE

Trevor Clark, Business Here are four areas worth ■ Do you know gross profit by Many owners discount Your ‘Five Ways’ key performance
coach, executive reviewing in your own business. product or service line? reflexively because they lack indicators to improve profit are:
coach, professional ■ Have you recalculated your confidence in their value 1. Leads
speaker and global Gross Margin Clarity and Break- break-even sales target in the proposition. 2. Conversion rate
trainer Even Reality last six months? If your customers choose 3. Number of transactions
If you do not have clarity on ■ Are your fixed and variable you purely because you are the
n my last your margins, everything else costs correctly classified? 4. Average sale value
article, becomes guesswork. cheapest, that is not a strategy. 5. Profit margin
II shared Clarity here changes That is a race to the bottom.
our I regularly see businesses everything and improving your Instead, review: Small improvements across
definition of wiring their books incorrectly. margins can shift your break- ■ Are we crystal clear on our these five areas compound
a successful Fixed costs get mixed with even point earlier every month – unique selling proposition? powerfully.
business: variable costs. Direct costs are take a look at the illustration on Profit is rarely improved by
misallocated. The result is a the bottom of the page. ■ Can every team member
A commercial, profitable distorted gross profit percentage articulate why we are different, one big move. It is improved
by disciplined, incremental
enterprise that works without and misleading reporting. Revenue Growth Without special, or better? decisions made consistently.
you. If your gross margin is wrong, Margin Is Dangerous ■ Does all of our marketing
We unpacked ‘Works Without your break-even target is wrong. I have worked with businesses communicate value, or just Final Thought
price?
You’ – what it means to build And if your break-even is wrong, proudly growing turnover every A business that works without
a business that can function your profit targets are built on year, yet the owners were more ■ Have we reviewed pricing in you is freedom.
without the owner being the unstable ground. stressed and less profitable. the last 12 months?
bottleneck, in other words ‘A Break-even in sales terms is In one case, we deliberately A business that is consistently
business you can sell.’ reduced revenue by over 30%. When your value is clear and profitable is power.
calculated as: well communicated, clients Profit funds growth. It funds
This month, let’s talk about the Fixed Costs ÷ Gross Profit We removed low-margin pursue you for expertise, service, reinvestment. It builds resilience.
second word in that definition: Percentage products, exited low-margin and outcomes. Not because you And it creates options.
clients, simplified operations, and
Profitable. For example, if your fixed costs focused purely on high-margin, are the lowest bidder. Revenue matters.
are R500,000 per month and high-value offerings and the If you are not clear on your But margin is what makes it
Because working without you is clients that delivered profit. value proposition or unique selling worthwhile.
powerful. your gross profit percentage is proposition, reach out to me. We
40%, you need R1.25 million in
But working without you and The result? teach a simple process we can take If you would like a quick coffee
not making meaningful profit is monthly revenue just to break or a formal deep dive into this
Revenue decreased …
pointless. even. ... but profit increased significantly. you through to get real clarity in area of your business, reach out.
this area and get your marketing
Quick checklist: It would be a pleasure to connect.
Too many business owners properly cooking.
Not because of magic. Because
Do you know your true gross
chase revenue. Smart business ■ profit percentage overall? of focus. To your success,
owners focus on margin. Discipline in Tracking and Trevor Clark. 
Before chasing growth, ask Decision Making
YOUR yourself: Profit is not a twice-a-year tax T: +27 (0) 31 266 2258
■
Which products or services
E: mastery@actioncoach.com
BREAK EVEN POINT generate the highest margin? conversation. W: www.mastery.co.za
POINT
■ Which clients are truly It is a monthly leadership
profitable after servicing costs? discipline.
■ Are we busy, or are we Too many businesses only
profitable? look at their numbers when
■ If revenue increased by 20% compliance requires it. By then,
tomorrow, would Profit follow the opportunity to adjust has
proportionally? passed.
Ask yourself:
Turnover is vanity. Margin is SCAN THE
strategy. ■ Are our financials finalised by
the 7th of every month? QR CODE
Pricing Confidence and Value ■ Do we schedule a proper TO LISTEN
Clarity monthly financial review? ON SPOTIFY
Discounting is one of the fastest ■ Are we tracking the Five Ways OR APPLE
ways to destroy margin. numbers consistently? PODCASTS.

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