What small business doesn't want to increase business profits? However, it's easy to lose track of the details that will set you up to hit your growth goals. We condensed our best profit coaching tips into 8 steps to help you increase profits by 15% every month. If you begin every month with these steps and set up your plan, you'll be in a position to celebrate on the last day of the month.
8 Steps to Increase Business Profits by 15% Every Month
01. Calculate Your Monthly Revenue
Revenue is the same thing as "gross income." It's the inflow of cash you get from sales. You can calculate your monthly revenue with this simple equation:
REVENUE = QUANTITY x PRICE
02. Calculate 15%
If you want to increase business profits by 15%, multiply your monthly revenue by 15%. For example, if your monthly revenue is $60,000 you would use this equation:
$60,000 x 0.15 = $9,000
Next month, you'll want to see your monthly revenue hit $69,000 if you want to increase profits by 15%.
03. Calculate Your Cost of Goods
The cost of goods are the materials, etc. it takes to provide your service or produce your product. This does NOT include labor costs.
04. Add Up Your Monthly Operating Expenses
Your operating expenses are the expenses you incur to keep the business open, regardless of sales. Operating expenses include, but are not limited to:
05. Calculate What Salaries You Can Afford, Including Your Own
If you're trying to increase your profits by 15%, you'll want to know how much you'll be able to pay your employees and yourself. Here's a simple equation to help you figure out how much you'll have for salaries and wages:
Monthly Revenues/Sales - Monthly Profits - Cost of Goods Sold - Operating Expenses = Amount left over for salaries.
06. Create a Budget In Your Accounting Software
Once you figure out all of these amounts, you'll want to enter them into your accounting software immediately so you can accurately track transactions and your cash position.
07. Check Your Cash Position Daily/Weekly
Keep a steady and constant eye on transactions and your bank account. This means you'll also want to make sure you're entering transactions regularly into your accounting software. Setting aside 30 minutes every day to do this should be enough time. That 30 minutes will create a lot of value for you, and make sure you're well on your way to increasing your profits by 15%.
If you stick to these steps, you'll definitely be celebrating a 15% increase on the last day of the month. Take a deep breath, a sigh of relief, and get ready to increase profits again next month.