This year is devoted to PROFIT
I am singularly focused this year on helping privately owned, expert knowledge-based companies make a profit from every engagement (sale) and increase their total annual profit.
1) Profit tells you how the company is being managed. It is the definitive measure of a company. It is critical for the long-term survival of the company. Profit produces the free cash flow that funds growth at the lowest possible cost.
2) Profit is the return on the investment risk the company owner(s) takes by being in business in the first place. Running a company is far riskier than investing the same capital in financial markets. Owners should get a higher return than they would in those markets.
3) Profit contributes to the financial wealth and estate of the owner(s). The capital the owner invests is part of their wealth and estate. It should grow over time just as that capital would grow if invested in financial markets.
Generating a Profit is Hard
Every services company Owner/Founder/Partner knows that this is hard. They know it’s not so straightforward as the well-known, simplistic formula would suggest.
Revenue – Expenses=Profit
My premise is that in order to create a profitable company, profit must be built into every sale. It cannot be what’s left after expenses are paid. My formula is:
Expenses + Profit=revenue
A whole lot of data, analysis, decision-making, and implementation is encompassed by this formula.
The idea is that you choose or set your prices and fees after considering all the expenses needed to offer the value plus the profit the firm requires on the sale. Revenue is the end point, not the starting point.
Value Packed 2021
In 2021 we will look at all the details–the questions, the data, the analysis, the decision-making, the tracking, the reviews, the revisions– that are required to generate a profit. I will share what works and what hasn’t worked, and I’ll include all the tools I have that will help your company make 2021 the year of Profit.
Do you know what will make this even better? Your questions and comments; your stories and your objections. Let’s make this a two-way conversation rather than a one-way street.
I’ll send the newsletter out every Monday. I will write a lot on LinkedIn, so if we aren’t connected there, please go to my profile and request a connection, which I will accept.
Adam Grant recently posted this: “Too many great ideas never see the light of day due to perfectionism. You don’t have to fix every flaw before seeking feedback. You just need to be proud of your progress.”
Crack the Pricing Code is a work in progress. And I’m both proud of it and aware that there’s more to be done. Join me as together we build stronger, more profitable companies.
What are you doing this year to be open to ideas and tactics you never would have considered before? To challenge others and also be challenged by others? I hope one of your answers is “to engage with Susan Trivers and other business owners.”
Here’s to 2021-The Year of Profit!