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Are you confused why your business is experiencing a problem? Can't pinpoint the reason?  It can be a challenge to drill down to identify the ‘real’ problem and point to some solutions.

"Don't Know" scenarios: Here is a diagnostic menu to identify the major causes of the problems you are facing.  Yellow Belt

Table of Contents:

I Can Sell More Than I Can Produce
I Produce More Than I Can Sell
My Sales are Falling 
My Profit is Falling
My sales and Profit are OK But I Keep Running Out of Money
I Have Too Much Inventory
Can't Take a Wage For Myself
Unhappy Customers
I Never Have Enough Time
I Don't Know How The Business is Going
I Don't Know How to Grow My Business
Am I In The Right Business?
I Have People Problems
I Have to do Unpleasant Jobs
Wrap Up

If you feel unwell but don’t know why, you go to the doctor.

They run through a series of diagnostic processes to find the underlying causes of the symptoms you are experiencing. Then they recommend a treatment.

That is what happens here; only you do it on your business.

If you do know what the problem is in your business but are looking for a solution:

Don't know what to work on? Read on.

You may have heard of the 4 different knowledge quadrants that we all work in:

  • I know what I know
  • I know what I don't know
  • I don't know what I do know
  • I don't know what I don't know

This article addresses the situation of the "Don't Know, Don't Know" scenario.

The fact that you don't know the answer to a particular problem is not any shortcoming on your part. Any business person spends quite a lot of time in the "Don't Know, Don't Know" quadrant.

This article helps you find your way out of this maze of possible problems. It identifies some of the most common problem scenarios and suggests solutions.

Identify your principal problems first, don't waste time on minor issues:

1. The good news is that there is probably only one major problem within your business at any time.
This is the "bottleneck" or "constraint".

Theory Of Constraints suggests:

  • At any time there is only one real bottleneck in a business or in a flow of work through a business.
  • Until you reduce the impact of this bottleneck, spending time working anywhere else in the business is a waste of time.
  • The bottleneck is the problem; and needs to be investigated first.

Go to the Theory of Constraints Menu (TOC) to find the bottleneck in your business.

2. The 80/20 Rule will assist you pinpoint the major problems in your business. 

  • It is ineffective and costly spending time on minor problems.

Go to the 80/20 Rule Menu and release the power to grow your business up to 16 times faster.

3. Are you thinking that this is a huge task?

  • You don't have to make many improvements for the boost to your profit to be quite significant.

There are several case studies in the article "Double Profits Reality Check".

4. Do you want to identify the principle problem yourself?

The "Five Whys Problem Solving Technique" will help you drill down for the root causes of your problems.

How to Use This Diagnostic

Now that you have identified your major problem/s either:

1. Go to the Level 2 diagnostic menu "I Don't Know What to Work On".

  • Scroll through and choose the problem that best describes what your business is experiencing.
  • Click on the link and it will bring you direct to the section in this article with the solution.

or

2. Continue reading through the problems and solutions below.

  • Some solutions will link to articles within Profit Savvy that address your problem.

I Can Sell More Than I Can Produce 

If you can sell more than you can produce the problem is on the production side of your business.

Work "flows" through your production system.

There are a large number of techniques available to improve this flow.

1. The articles at the following link, will assist you streamline this production flow and grow your profits:
Level 3: Making Production More Efficient Menu

2. There is usually one principal bottleneck in your business.
The fastest way to improve the "flow" through your business is to reduce the impact of the bottleneck.
The Level 4: Theory of Constraints (TOC) Menu will help you to identify the bottleneck and improve flow.

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I Produce More Than I Can Sell 

If you produce more than you are able to sell, your problem is on the sales side of your business.

There are three areas that you can work on depending on what you think the problem might be.

I Can't Find Buyers

Buyers are not knocking on your door to buy your product:
You have a marketing problem.

Go to the Marketing Menu:
Zero in on the traffic strategy that makes the most sense for you.
Remember, your traffic strategy needs to work in tandem with your conversion mechanism.

People Aren't Buying

People are coming to you interested in your product but not buying it.
You have a sales conversion problem.

Go to the Sales Menu:
Increase customer leads and optimise your sales funnel.
Tuneup your website and search engine marketing.

Get More Income from What I Sell

The quantity of your sales are ok but you are not making as much money from them.
You have a pricing problem.

Your prices may not be keeping up with an increase in your costs. Although sales are remaining similar you are not making as much money from them.

Go to the Article: How 1% price change could give 20% profit increase
Price is a major determinant of the profitability of your business!
A price change of as little as 1% can often lead to profit increases of up to 20%.

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My Sales Are Falling 

Your sales are falling in either volume or value in comparison to previous periods.
Following are 6 reasons why this can happen.

New Competitors

Previous customers have moved to a new competitor in your market.
Competitors can exist in several forms:

  • Physical to digital transition:
    Customers are purchasing online instead of visiting you in person.
    You are losing customers to digital competitors.
  • Competition for buyer leads:
    A competitor enters the market and diverts potential customers away.
    You have a "lead generation" problem.
    You are not finding enough people expressing some interest  (called leads) to convert to buyers
    Go to our Marketing Menu - Increase Leads.
  • Competition for sales:
    Customers visit you and express interest in your product/service.
    You are not managing to sign them up.
    Either your sales proposition is not clear or your price is not competitive.
    Go to the Sales Menu.
  • An industry wide decline:
    Example:
    Video and music stores are declining as they compete with digital streaming services.
    Is your industry in this type of decline?
    If it is, give serious thought to the future of your industry
    Solution:
    Either sell the business.
    or
    Introduce new product lines to compensate for the loss in the declining industry.
    Go to the Article: Profitable Business Exit Sale.

Changes In Your Sales Funnel

The sales funnel is your sales process.
You tip potential buyers in the top and they filter down through the various layers of your funnel.
A proportion of these potential customers buy your product or service.

1. You can learn a lot about falling sales by looking at the several steps in your sales funnel:

  • Are the total number of your customers falling?
  • Are you getting fewer expressions of interest (referred to as "leads")?
  • Has your ability to convert them to a purchaser declined?

Solution:
Look at the statistics for your sales funnel, historical and the present. This will show you where your problem is.
Go to the article - Sales Funnel.

2. Has the average sale per customer fallen?
Reasons for this:

  • Your business is not performing the sales function as well as it might.
    Go to the article - Sales Funnel.
    Scroll to the suggestions on improving your Sales Cycles.
  • Same store, sales figures year after year have changed:
    Look at historical lead generation and sales function data, compare with the present.
    Look for weaknesses that have developed in your sales funnel.
    This will identify areas to address.
    Go to the Sales Menu.

Change in Resources

Changing or diverting some of the resources, like people and money, is a common reason for a fall in sales.

1. You are an owner of a small business and do a lot of the marketing. You divert your attention to other parts of the business.

  • Focus your resources back onto the sales element.
  • Hire sales staff.
  • Outsource some of the elements of the sales process to outside parties. 
  • Go to the Diagnostic Menu: People Issues

2. Your business is large enough to employ sales staff.

  • Do you have new staff members still finding their feet selling your product/service?
  • Are long term sales staff still putting their energy into the sales process?
  • Go to the Diagnostic Menu: People Issues

3. Marketing of your sales through advertising etc.

  • Have you reduced your marketing expenditure which has led to a fall in your total sales?
  • This is false economy when it leads to a serious decline in sales.
  • You save money but saving money won't cause your business to succeed or to grow.
  • Go to the Marketing Menu.

A Change in Product Mix

1. Have you introduced new products into your product range?

  • Are these new products not selling as well as you hoped?
  • The 80/20 rule says that as few as 20% of your products earn 80% of your income.

Solution:

2. Have the products in your range gone out of fashion?

  • If you continue to stock these products when they are not selling your sales will fall.
  • If you fail to stock new lines that are more likely to sell well, your sales will fall.

Solution:

  • Identify a weakness in your product mix. 
  • Find the products that are often out of stock, these are your fast moving lines that are selling well.
  • When you run out of them, you are sacrificing sales.
  • Go to the article: Cost of Over and Under Stocking.

Change in Your Value to Customers

Have your customers reduced their purchases from you because they are not satisfied with the value that you are offering?

Go to the Sales Menu.

Sales Cycles

Sales will naturally ebb and flow.
Short term fluctuations are probably due to seasonal variations; (e.g.) Christmas, Summer and Winter fashions.

Long term fluctuations can be due to:
1. A multiple quarter or multiple year decline in the economy.
The economy may come back, the question is; can you operate in these tighter circumstances?
When the economy is in a depressed state, there will be plenty of coverage in the media about the problem. That will give you some indication if it is the cause.
Solution:
Decide whether you can live with this downturn or need to take remedial action.
Go to the Diagnostic Menu: Money Management

2. Sales have a longer term trend over certain periods, e.g. year.
Look at your historical data and get your sales history on a monthly basis as far back as you can.
Put this data in a spreadsheet.
Produce a graph of the monthly fluctuations and the average trend.
Look at the trend in your sales. This will show you whether this is a short term or long term issue.
If it is a long term issue go to the Diagnostic Menu: Sales & Marketing.

BOL2 190719

My Profit is Falling 

The issues is that your profit has been reasonable in the past, but is now decreasing, and you want to know why.

Why is Profit Falling

It can be difficult to pick out the real reason for a drop in profit.
Income and expenses are always moving around, there are too many changes to make sense of it all.

The formula for profit is:

Revenue - Cost of Product - Overhead Costs = Profit

"Revenue" is also called Income.
“Cost of Product” is also called "Cost of Goods Sold” or “Variable Costs”.

If your profit has begun to fall, at least one of the elements of the left hand side of this equation has changed.
Your sales income/revenue is declining and/or
Your costs are increasing out of proportion.

How to determine what has changed?

  • Go back over your historical data. 
  • Look at what has changed and to what extent it has changed.
  • Show your various elements of the equation as a proportion (or ratio) of the revenue.

Example:
Calculate overheads as a proportion of revenue.
Overhead Costs divided by Revenue = gives a percentage of how much of your Revenue is consumed in Overhead Costs.

Revenue = $100,000
Overhead Costs = $25,000
$25,000/$100,000 = 25% of Revenue is consumed in Overhead Costs.

Has this percentage gone up over time?
Then that element (in this case Overhead Costs) has increased out of proportion.

You would expect some of these figures to fall as your business grows.
This is because your business would spread the costs over more revenue.

You get access to revenue, cost of sales and overheads costs in the annual tax accountant’s report.
Get into the habit of collecting this more frequently, monthly or quarterly.
This will allow you to track reasons for changes in your profitability.

Go to the Article: Gross Margin Analysis (Gross Profit).
This is a useful tool for working out why your profit is falling.

Now that you have worked out which element of your profit is falling, read the related articles:

To increase your revenue:
Go to the Diagnostic Menu: Sales and Marketing.

Your business has an increase in costs:
Go to the Diagnostic Menu: Specific Issues
Click on:
Manage Inventory for Better Revenue and Lower Costs
Making Production More Efficient.

Reasons for Low Profitability

Has your business has been suffering from low profitability for some time?
If it is not due to a change in circumstances, you need to examine other reasons why your profit is low.

The profit equation:

Revenue - Cost of Product - Overhead Costs = Profit

The 3 elements; revenue, production costs and overhead costs effect Profit.

To identify where your low profitability problem is, examine each of these elements.
Go to the resource links following each problem identification for solutions.

Poor Sales Revenue

Your sales revenue is low.

Issues causing this are:

  • Poor sales and marketing.
  • Poor pricing.
  • Feast and famine when you are focusing on your sales and marketing function.
  • Inconsistent or poor sales effort.
    • Small business owner operator -
      • Responsible for marketing and accounting but it is necessary to spend more time on the "tools" of their business.

Does the problem lie in insufficient attention given to the marketing process?
Resolve to spend more time and/or resources on this function. Without more revenue coming in, you can never grow your profit.

Is the problem a lack of a sales and marketing system?

Go to the Diagnostic Menu: Sales & Marketing.

Excessive Production Costs

Whatever your product or service is, there are direct costs associated with it.
These are also called  Variable Costs or Cost of Goods Sold (COGS).

These costs go up and down depending on the amount of product or service that you sell.

Because they are linked to your sales revenue:

  • They should go up when your revenue goes up and down when your revenue goes down.

This relationship can be distorted in at least 2 common ways:

1. If you over produce your product in either its completed form or some of its components.

  • This can happen when you have surplus time available and you don't want to "waste time" doing nothing. (this problem is called "Local Optima")
  • This leads to an increase in either your finished goods for sale and/or your Work in Progress (WIP).

2. The inventory that continues to increase locks up:

  • Salaries of your staff involved in producing the inventory.
  • The cost of raw materials that have gone into the inventory.
  • The money you have spent on wages and raw materials but not been able to sell the output.
  • Your profit, is eaten up by over-production of product that you have not been able to sell.

This is a very common situation when a market takes a down-turn.

Solutions:

1. Divert staff into other functions like maintenance.

  • This is a problem with “local optima”.
  • You do everything at the maximum rate and cause inventory and WIP problems.
  • Go to the Article: Local Optima Problem Tool.

2. Build up of excess inventory.

  • Inventory has consumed staff salaries and raw material costs.
  • It has tied up your profit in the unsold product sitting on your stock room shelves.
  • Go to the Article: Over and Under Stocking

3. See more on reducing Variable costs

Go to the Article: Reducing Variable Costs.

Overhead Costs

Overhead Costs include:

  • Most of your wages (other than casual and outsourced wages).
  • Rent on premises.
  • Loan interest and similar expenses.

These costs don't fluctuate a lot.
If your overhead costs are high compared to your revenue - they consume what might otherwise be profit.

Potential Solutions

Profit falling is a very common issue for business.
Profit Savvy has a dedicated section on optimising your existing business.

Go to the Diagnostic Menu: Streamline My Existing Operation.
Follow the path to Double Your Profits in 100 Days which streamlines your business with its existing revenue.

You may be sceptical that this is even possible.

Even a 1% change in your prices can lead to a 20% increase in profit.

Go to the Article: Double Profits Reality Check.

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What is a Good Profit

A “good profit” is a level of profit that gives you the lifestyle that you want.

When you think of what that profit is factor in the cost of your own wage. This will give you a better quality of life.

Can your business pay you a wage?
If not, ask yourself if this business is where you should be putting your time and effort.

The alternative is some other business or job, that will pay you a decent wage.

An alternative way of determining a decent profit:
Once you have paid yourself a wage look at the Return On Investment (ROI).

When you started the business, you put in a certain amount of money in cash and your own time to get started.

Example:
Personal cash: $100,000
Your profit: $10,000
Your ROI: $10,000 divided by $100,000 which equals 10%.

Your ROI should be higher the more risky your business is. The higher the risk, the bigger the chance that you will lose some of your investment.

Is your ROI less than what you can get in a bank term deposit or on the stock market?

  • Have a serious conversation with yourself.
    • Consider whether you should be closing down the business.
    • Consider if your capital would be better in the bank or stock market.

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Profit Autopilot

Many businesses do not set out with a profit in mind and most accountants give you a profit figure that is an afterthought.

At the end of each tax year, they give you a figure to say that your profit was such and such.

This approach means that you could be trading for an entire year before you work out how profitable you are.
Has it been worth the time, money and energy?

This is quite a common problem in smaller businesses.

 

Profit Autopilot's collection of articles:

  • Will give you your desired profit level automatically.
    or
  • Tell you when you are never going to get the profit level you want.

Go to the Menu: Profit Autopilot.

BOL2 190719

My Sales and Profit are OK But I Keep Running Out of Money 

Are your sales and profit levels OK but you keep running out of money?

  • You have a "liquidity" problem.
  • Liquidity refers to your ability to pay your debts as and when they fall due.

Your debts include:

  • Tax
  • Wages
  • Costs of Goods Sold
  • Interest on Loans

2 reasons that can lead to liquidity problems.

1. I Can't Get People to Pay Me

You have the income and a decent profit but you don't have the money when you need it.

Problem:

  • People aren't paying you on time.

3 reasons for this happening:

A. Cash Flow Problems

You are paying out money to your suppliers faster than you are getting it back from your customers.

  • Solution:
  • Knowing how your cashflow is going is important.
  • Measuring your cashflow conversion will dramatically improve your cashflow.

Go to the Diagnostic Menu: Cashflow

Go to the Article: Cashflow Conversion Cycle (CCC)

B. Accounts Receivable

Are you invoicing on a regular basis?
After customers receive your invoice, they typically pay you in 30 to 60 days.

Example:

  • You invoice a month after you sold the product.
  • You will then wait 2 months or more to get paid (30 days to send out the invoice and 30 more to get paid).
  • Solution:
  • Increase the frequency at which you send out your invoices. 
  • Change it from saying it is due in 7 days to putting the date that it is due.
  • Customers are more likely to pay on the due date on the invoice.
  • It is too easy for them to lose track of the date the invoice was issued to determine in 7 days.

Go to the Diagnostic Menu: Cashflow

Go to the Article: Boost Your Accounts Receivable

C. Delivery Related Problems

Does your business suffer from poor delivery quality to your customers?

Problems:

  • Your production system is not able to keep up with demand.
    • Shipping of the product/service is delayed.
  • You are shipping partial shipments.
    • It takes time for the full shipment to go to your customer.

Outcome:

  • Your customer is unlikely to pay until they receive 100% of the shipment of product/services.

If your delivery system is inefficient, you will be delaying your payment.

During this time:

  • You are paying your suppliers for the raw materials that you are consuming.
  • You are paying your staff for the wages, goods and services that are tied up in the production of the goods/service.

Some suppliers will also delay paying you until they get paid themselves.

Example:

  • You manufacture a product that you supply to wholesalers who in turn supply it to retailers.
  • Your wholesaler may delay or slow down payments to you until they get paid by their retailers.
    Otherwise they have a liquidity problem of their own.

Solution:

  • Many delivery problems can be overcome by reducing the batch sizes in your production/services.
  • Reduce the size of the batches shipped to your consumers.

Go to the Article: Small Batches Tool

Read more on our forthcoming article on Flow

2. I Don't Have Money When I Need It

Do you draw payments for your expenses from a single bank account?

Problem:

  • Due dates for these expenses fall at different times in the month, money is continually going out of this bank account. 
  • Often, at the end of the month, there is not enough money left in the bank account to pay some critical expenses like taxes and interest. 

Solution:

You know what a “Piggy Bank” is; a place where you can park cash until you need it.

Having loaded money into them, you can be confident you will have cash when needed.
Your stress over being able to pay bills, as they fall due, is greatly reduced.

Go to the Article: Profit Autopilot "Piggy Banks".
Go to the Diagnostic Menu: Profit Autopilot.

BOL2 190719

I Have Too Much Inventory 

Your instinct may tell you that you have too much inventory on hand.
Sometimes, you can’t see it for looking because you have become used to having that amount of inventory on hand.

Warning signs include:

  • An increasing need for space to store growth in inventory.
  • A cash shortage due to money expended on labour and raw materials for the growth in inventory.
    • But you have slower sales and less money recovered from sales.
  • You are throwing out an increasing amount of life-expired products (like some foodstuffs).
  • A lot of your inventory is old product that is no longer in demand.

Inventory that you are holding has:

  • Consumed raw material costs and staff labour if you have produced it yourself.
  • Consumed your working capital if you have bought the stock in for later re-sale.

Problem:
You have outlaid cash and won’t get it back until you sell the inventory.

Too much inventory impacts:

  • Your profit.
  • Your cashflow.
  • Your liquidity.

There can be many reasons for excessive inventory.

Solution:

Go to the Diagnostic Menu: Profitable Inventory Management
Go to the Article: 80/20 Inventory Management.

BOL2 190719

Can't Take a Wage For Myself 

Many businesses find themselves unable to pay a wage to the owner/operator.

Profit Savvy offers 2 solutions to this problem.

1. Design your business around the desire to take a wage.

Solution:
Go to the Diagnostic Menu: Profit Autopilot 
It will hardwire a wage into your business plan.

2. Optimise your existing business.

Solution:
Go to the Diagnostic Menu: Streamline My Existing Operation - Double Your Profits in 100 Days (DP100).

This will allow you to:

  • Generate as much profit as possible from your business.
  • Take a wage for yourself.

At some point, you will need to ask yourself:

"Can our business ever be profitable enough to pay me a wage"?

This question is answered under the topic "My Profit is Falling" above.

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Unhappy Customers 

Are you dealing with unhappy customers?

There are several reasons which Profit Savvy addresses as follows:

Service Levels

  • Is your customer service disappointing your customers?
  • Are your customers grumpy?

It is a fact of life that comparatively few people complain about poor service; most just quietly walk away.

So, if a customer does take the time to complain it is indicative of quite a few more who haven't bothered.
The rest vote with their feet and go elsewhere.

Solution:

  • Have a method of collecting the nature of service complaints.
  • Write them down so that you can keep track of them.
  • Look for any significant changes.

Poor Delivery

Are your customers complaining about problems with timely delivery of your product/service?

Solution:
This question is answered under the topic Delivery Related Problems above.

Product Quality

  • Is your product of poor quality or demonstrating a rapid fall in quality?
  • Are you keeping a defective product in the production system and then shipping it?

These will lead to unhappy customers.

Solutions:
Quality control: 

  • Identify "defects" in your product as soon as possible.
  • Take the defective products out of your production line as soon as they are identified.
  • Put defective product, taken out of the work flow, into red bins (special colour so everyone knows they are the bins for defects).
  • As these start to fill up:
    • Research what might be causing the defects
    • Engineer some fix to remove or reduce the problem.
  • This might mean increased problems making timely deliveries of the finished goods.
  • It is far better to deliver high quality product late than poor quality product on time.

Product Range

  • Are your customers complaining about product range?
  • Are you keeping up with new and emerging products?
  • Are you keeping up with what your customers need for their customers?
  • Are you running out of your popular products that sell well?
  • Are your customers irritated by this shortage?

Solution:

  • Have a system for "listening" to these complaints.
  • Improve your product range in response, where possible.
  • 80% of your sales are likely to be from 20% of your product range.

Go to the Article: The Amazing 80/20 Rule
Go to the Article: Cost of Over and Under Stocking

Collecting Data

Are you an owner/operator in your business?

  • Spend time with your customers, in particular the ones complaining.

Your front line staff may learn to live with any short-comings in your business service model. They take them as "normal"?

  • You have a much better understanding of what your business can do.
  • When you hear of a problem you will identify a straight forward solution to the problem.
  • Your front line staff, lacking your breadth of experience, may not realise.

Solution:

Undertake "incremental improvements" to reduce the problems.

Go to the Article: Kaizen Leads to Continuous Incremental Improvement.
This is a Japanese concept.

BOL2 190719

I Never Have Enough Time 

Not enough time to get everything done?
Welcome to a common problem among business people.

"Time Management" consists of a whole body of methodologies for reducing this problem.

Within Profit Savvy you will find a bundle of resources addressing this problem.
Gain some sanity by visiting the link below.

Go to the Diagnostic Menu: Time Savers Menu

BOL2 190719

I Don't Know How The Business Is Going 

No idea of how your business is going financially?
Sadly this is a common occurrence for many businesses.

Do you have a "gut feel" and can sense that the business is experiencing problems?

Problems:

  • Your gut may not give a clear indication of the extent of the problem.
  • You prefer to have your hands on "the tools" which is what you love.
  • You do the accounts and other book work only when absolutely needed.

Outcome:

  • You are shocked when you receive your annual tax return from your accountant.
    • This reveals the full extent of the problem.
  • You find that you have not been earning a great deal of money.

Solution:

  • It is not necessary to have a huge number of measurements (which we call "metrics") to track your business.
    • There are only 4 or 5 dials and a few warning lights, on the dashboard of your car, that tell you how the car is going.
  • It can be the same for your business.
  • Develop a discipline of "doing the books" at least once a month.
    • Update your dashboard attributes at the same time.
    • Get a quick and timely indication of any problems in your business
  • or
  • Outsource: engage a bookkeeper or your accountant to generate the information for your dashboard.

Go to the Diagnostic Menu: Business Health Monitoring. 
This is a collection of articles about business metrics.

BOL2 190719

I Don't Know How to Grow My Business 

Don't know how to grow your business?

  • Does it seem a daunting task with a never ending number of things to carry out?
  • Do you have a proper growth goal in mind?

Profit Accelerator consists of 3 programs to address your problems:
 
DP30:

  • A 30 day rapid stabilisation of a distressed business.
  • Undertake this, before the following 2 programs, if your business is experiencing tough times.

Go to the Diagnostic Menu: Rapid Response Troubled Business.
 
DP100: 

  • A 100 day program to optimise your existing business and remove as much waste as possible.
  • There is little point in growing your business that is not optimised.
    • You will also grow the amount of wasted time, effort and resources.

Go to the Menu: Profit Accelerator.

DP365: 

  • Once you optimise your business, you can begin to grow it at a sustainable rate.
  • This Profit Accelerator program is a 12 month project to once again double your profit.
  • In this program you increase your revenue.

Go to the Menu: Profit Accelerator.

Double Profits Reality Check: 

Are you sceptical that you can go on doubling your profit?

  • This article gives several case studies and examples of how you can increase your profit.
  • This will give you the confidence to start growing your business.

Go to the Article: Double Profits Reality Check.

BOL2 190719

Am I In The Right Business?

At some stage, business operators find themselves asking the question "Am I in the right Business?". This is usually when things seem not to be going too well.

The only person who can answer this question is you and your close advisors.

Following, are some things to consider when asking if the business is right for you.

1. Personal satisfaction is an important consideration.

Life is too short to work on something that doesn't give you personal satisfaction.

There is an hierarchy of satisfaction developed by a researcher named Maslow.

  • He puts human needs in a pyramid shaped classification with the most important at the top.
  • At the top is what he calls "self-actualisation" meaning to do things that "turn you on".
  • Further down the pyramid are things like money.
  • At the bottom are the basic human needs of food, shelter and sex.

Solution:

In your business, spend as much time in the self-actualisation space as possible.

Go to the Wikipedia article: Malsow's Hierarchy of Needs.

2. Can't make enough money is a common complaint.

2 reasons for this are:

  • A. The business sector you are in cannot produce a profit of the scale that you desire.
    • You may need to move to another sector or expand your business "footprint".

Solution:

This question is answered under the topic "I Don't Know How to Grow My Business" above.

  • B. Your limitations as a business manager.
    • Profit Savvy exists to deliver suggestions on how to manage your business.
    • Following these suggestions will reduce the impact of your limitations.
    • Over time you will learn and become a very competent business manager.

Solution:

Go to the Diagnostic Menu: Personal Development.

3. Time and Resource Requirements will be finite and limited.

  • Your business will need enough of each to operate successfully.
  • If you find that is not possible ask yourself - "am I in the wrong business?".

Solution:

This question is answered under the topic "I Never Have Enough Time" above.

Go to the Article: Profitable Business Exit Sale.

4. Future of Your Industry: many industries are being disrupted by innovation.

Example:

  • Music started out on vinyl records, moved to cassettes and then CD's. It is now available streaming online.
  • As a consequence, some shops that used to sell recorded music are now going out of business.

Is your business in an industry that is experiencing this sort of disruptive change?

Options:

  • Consider whether you want to stay in it and track the decline of the industry. 
  • Consider moving to a different industry. 
  • Consider moving to a different element of the same industry that has a better life expectancy.

5. Exiting Your Business

Have you decided that you are not in the right business?

  • You will want to get out of your business.
  • Preferably making as much from the exit sale as possible.

Go to the Article: Profitable Business Exit Sale.

BOL2 190719

I Have People Problems

All business relies upon the people who work in and support it.

Are you having problems arising from the people involved in and around your business?

Here are people related problems and solutions:

1. Do you have difficulty sharing your problems with others?

  • You are missing out on having a "sounding board" that can help you.

2. Do you have a problem that is best not shared with staff?

  • Example:
    Talking about problems with payroll with the staff who are the beneficiary!

3. Do you have a life partner who does not work in the business?

  • Your life partner lives with you as a worried business/owner operator.
  • If you are not sharing your reasons and concerns this will strain your relationship.

4. Is the business struggling financially?

  • If you are draining personal money into the business this will disadvantage the family.
  • This stress can lead to relational break ups, which is a very sad outcome, in tough times of the business.

5. Are you not talking about the problems because you "don't want to worry" your life partners?

  • This lack of communication, in turn, causes its own stresses in the relationship.

Solutions:

1. Give some thought to finding a "mentor" with whom you can discuss your problems.

  • Based on their previous experience and knowledge they make suggestions for possible solutions.

Go to the Menu: About Mentors, Coaches and Tutors.

Decide which is the best fit for you - Mentor, Coach or Tutor.

2. Staffing problems:

Go to the Diagnostic Menu: Human Resources/People Issues.

  • Focus on the staff related articles.

3. Stress management:

Go to the Diagnostic Menu: Stress Management.

  • Covers the 4 main contributors to stress.
  • Article and video links.

BOL2 190719

I Have to do Unpleasant Jobs

Do you have jobs that you do not like doing or are not particularly good at?
This is common amongst business owner/operators.

Often, the least liked jobs are the business’ accounts and its sales.

Problem in a small business:

  • If the owner/operator doesn't do them, there is no-one else to do them.

Solution:

  • Outsource the accounting to a part-time bookkeeper.
  • It's more difficult to outsource the sales.

Go to the Diagnostic Menu: Outsourcing.
Go to the Menu: Sales and Marketing.

BOL2 190719

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