Are you experiencing low profit in your business, but aren’t sure what to do about it? Well, there are a few things you can do to increase profit.
It’s not uncommon for me to come across a business where there’s a lack of profitability, and when we dig in, we often find that these businesses are over-servicing their clients, or they’re just not charging enough for the great value that they’re providing.
Often this lack of profit happens because the founders lower their prices when they get started or when they change markets. By doing so, they’re able to attract cost-conscious clients, but they also end up with low profit.
One simple way to increase profit is to think about the value exchange triangle. This is a triangle comprising three elements of your business: price, quality, and service.
If you’re offering great quality and service, you’re probably running around servicing your clients all the time and not making the money that you should be. If this is the case, you should find people who truly value the quality of the product or service you provide.
On the other hand, you could be charging enough and offering great quality, but then you may not be able to service your clients as quickly. There’s always going to be a trade-off.
Keep in mind the value exchange triangle as you think about your low profit. It could be that you’re too focused on quality and service without having an appropriate price. If you want to increase profit, make sure your prices reflect your value.