Sure, we all want to run profitable companies. But when trying to balance work, home and our employees' needs, it can be easy to feel overwhelmed by all the responsibilities and demands competing for our time and attention. When you feel like there's more to do than there are hours in a day, it's easy to lose focus on what you need to do to increase profitability, especially if you think of it as something abstract.
I've compiled some concrete, actionable suggestions that can help you take your first steps toward profitability. These are tactics I've used in my businesses. Implementing even one or two of these strategies can help you learn to prioritize profit and increase profitability.
1. Consider making your office virtual.
The days of an office full of employees chained to their desks are long gone! One of the ways I've learned to increase profitability is by trimming the unnecessary expenses I used to spend on maintaining a traditional office.
Many of my employees work from home, and I think of it as a win-win all the way around. I save money and they're happier and more productive. Unless you absolutely must have staff in place to deal with clients in person, you may be able to free yourself from traditional office expenses. Virtual offices are the future, and you can start taking advantage of the tech right now.
2. Move to a four-day workweek.
Just as you can save money by freeing your employees to work from home, you can also trim expenses and increase profitability by rethinking the traditional workday.
Moving to a four-day workweek can help reduce commute time, and you may also find that you're being more productive since you're spending less time transitioning into your work mode.
Before reducing your workweek, make sure your staff's schedules can accommodate your customers' needs. It may take a while to perfect your revamped workweek, but the benefits can be noticeable. Employees are generally thrilled to put in a little extra time each day to earn an extra day off, and you can get the benefit of satisfied, refreshed staff.
3. Offer results-based compensation to your employees.
What you need most from your staff typically isn't time…it's results! You most likely need sales, satisfied customers and tasks to be accomplished.
When you shift to results-based pay, your staff may become motivated to deliver what you really need, and your company may reap the benefits of that renewed focus.
4. Make profit a good word and a company value.
Language has power, and we need to start changing our thinking about profit. Profit isn't about greed. Profit is about sustainability. If your company isn't profitable, you probably won't be able to support your family and your employees, or to serve your customers. Profit is good. It's what lets you do your important work.
5. Focus on profit at the individual level.
If you and your employees think of your company's profit as solely your concern, then you're not only taking on a disproportionate share of the responsibility, but you're also missing a huge opportunity.
Profit can (and I think should) be a focus for every member of your team. When you make the connection between your employees' personal goals and the profitability of your business, you can help transform your staff into individual guardians of your company's fiscal health.
6. Start cutting ties with your bad clients.
I realize your first instinct may be that you need every single one of your clients, but that may not really be the case. I've often found that there are usually a couple of terrible customers (I call them rotten pumpkins) that eat up huge amounts of my time and energy while contributing little to my bottom line.
What do I do? I get rid of 'em. When you cut a lousy client loose, it can help free up your resources and allow you to devote more time to clients who are far more profitable—and more enjoyable to work with than a rotten pumpkin.
7. Share your profit with your team.
This may seem counterintuitive, but hear me out. Just as making profit a focus for your staff can help build a culture that's better for your bottom line, when your staff gets a piece of the profit, they may become even more cognizant that their work matters. They may start to see the direct connection between the work they do and the health and sustainability of your company. I've found that when I spread the wealth, I reap the rewards in the form of even greater profits.
Profit can be a mindset and a habit. A key to increasing profitability can be making deliberate changes that can help transform your company into a profitable, healthy, sustainable business that supports you and the people you care about.
Read more articles on company culture.