Profit is not a dirty word

Simply Business are ‘Profit & growth Advisors to Business.’ Our mission is to help businesses make the effort, energies and risks of being in business worthwhile.

How do we do this? We help businesses increase their profits.

Profit is not a dirty word!
We don’t talk about it enough!
We don’t make enough of it!
And, we certainly aren't doing enough about growing it!

Profit growth is critical to the long-term health and sustainability of any business. A business that doesn’t make profit will disappear, and a business that doesn’t grow will eventually disappear.

Many businesses just don’t make enough profit. And, man businesses’ profits and decreasing as sectors become more and more marginalised. The end result is dividends are decreasing, business values are decreasing and less money is available for reinvestment in capital and people.

Most interesting is that profit is simply not being talked about enough. Profit has become a ‘dirty’ word.

There are two types of profit;

  • Operational profit, which is what everybody understands. It is measured by EBIT or nett profit before tax.
  • The other is enterprise profit which is the value of the business over and above nett assets.

Making acceptable profits and profit growth must be put higher on a business leaders’ agenda with positive action being taken to reverse trends. But, how?

There are many strategies available to leaders however believe that they fit in to three distinct categories.

  • Maximising current profitability

Is it imperative that businesses maximise their profitability before growing sales. There is a real danger in putting more sales through an incompetent system. Trying to grow profitability through a revenue growth strategy is extremely risky. Leaders should consider strategies such as identifying and eliminating major variances, removal of business waste and increasing direct labour productivity.

  • Profitable growth

Once profitable has been maximised, the business is then in a position to grow revenue to increase profitability. Profitable revenue growth is the function of marketing, and each business must develop their own blend of strategies what when implemented achieve sustainable profitable growth. This will include strategies such as building marketing capability, positioning the market, looking after customers you already have, finding new customers, and building your brand.

  • Growing enterprise profit

Businesses need to shift their operating profit to focus to increasing the enterprise profit, which is the value of your business over and above nett assets. This value is increased by increasing future maintainable earnings, or by increasing the multiplier applied to your business. This can be achieved through a combination of strategies which include strategic planning, non-owner dependent structure, policy and procedures manual, and being due diligence ready.

On a lighter note, below are some quotes that we have found that support our philosophies on profit;

  • It is not how big you are, but what your business is worth that matters
  • Profit is not a dirty word, it is THE word
  • Business is about solving people’s problems – at a profit (Paul Marsden)
  • If a business doesn’t make a profit it will disappear, and if it doesn’t grow it will eventually disappear

If you are interested in hearing more about the solutions which Simply Business can offer to you and your business, to help you grow your profits or increase your business wealth, contact us now on 03 9797 0590 or admin@sbasuccess.com.au.

Alternatively, you can register for one of our FREE upcoming seminars by clicking here.