Too Much Exposure…

The sun, too much exposure can be detrimental to your body. Similarly, financial exposure can be highly detrimental to your business.

I have had consulting clients and others tell me, quite proudly in fact, ten percent of something is better than fifty percent of nothing – prophetic!

The challenge as I see it, is most people have not taken the time to truly review their business model.

What does it cost to run my business?

Have you figured all the factors to, not just run a business, but to run a “profitable” business?

• Rent/Mortgage
• Utilities
• Labor
• Insurance
• Taxes
• Equipment costs
• Auto
• Machinery
• Maintenance
• Marketing and Sales
• Training/Education

I am really shocked when working with various clients over the year, that the majority have no idea what is their bottom-line breakeven profit percentage? And why is that important? For each person, each business it will be different. As a business owner or salesperson everyone should know how profitable and the path their own specific success.

When I worked in sales, I set a goal at the beginning of the year outlining what my profit goals were going to be, I backed in the gross profit I wanted and applied the sales needed to achieve those goals. I would then break it down, per month, per week, per day to determine those specificsmaller goals. At that point, it was easier for me to achieve the small goals in-order to achieve the prize in the end.  If for whatever reason I did not achieve my desired goal, I could go back at the end of the week or month and analyze what I did wrong AND what I could have been able to do better. 

One of the big factors I learned early, most of my sales in my early days were underperforming based on what I wanted and needed to make to be profitable. With that knowledge I could make some notable changes.

Here are a few things to consider:

• My profit margins have nothing to do with a supplier’s or vendor’s profits. They most likely have gone through extensive review of what they need to make to ensure they too can remain in business and stay profitable. I realized the “pricing” the vendors set their pricing was based on their profits, not mine.
  

• I would take all the talent me and my team brought to each deal, and the pricing I would charge my clients would be based on MY business model.
  (Note: the pricing vendors put on their websites and in their catalogs are merely ‘recommendations’)

When I created this mindset shift, my profits became more aligned with my company goals. At the beginning of this article, I mentioned financial exposure can be detrimental to your business, consider this,

If you write business at cost+ make sure the “+” covers your business profitably. If you write an order for $1,000.00 and the cost of goods are $900.00 (90% of the sale) your financial exposure is $900.00. You take away $100.00 – 10% of something is better than 50% of nothing. That type of thinking, like the sun, could seriously burn if you are not paid.

My goal in writing this article is to have you consider reevaluating your business, making sure you are not short-cutting but maximizing your profitability. I hate seeing that!

Here is to a much better, more profitable 2021, which is right around the corner. As always, continued good selling.

Best,

Cliff