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Lucy Cameron
Wellbrook House
Wellbrook Hill
Mayfield
East Sussex, TN20 6HH
United Kingdom
  07714 740 307
  01435 872495
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Top Tips – 5 Ways to Drive Your Profits


Have you ever heard the phrase turnover is vanity, profit is sanity and cash is reality?

As a business coach I speak with lots of Business Owners, it never ceases to amaze me the amount of people I speak to that tell me they have a really successful business, the reality is often they have a great turnover, profit is declining and they take salary whenever they can.

There are 3 measures that every business need to be looking at: number of customers, revenue, (also called turnover) and profit. There are 100’s of strategies I use to drive up each of these areas with my clients.It takes time, effort and investment to apply these strategies with-out measuring whether the numbers go up or down how do you know the impact?

To increase the number of customers there are 2 drivers: the marketing that will create leads and the conversion rate that gets the prospect to spend the money and become a customer. The way that you measure the leads is likely to depend upon your business…

  • For me it is someone that has shown an interest in growing there business and wants to find out how business coaching can help them.
  • For my manufacturing clients it is often companies they have quoted for
  • For my retailing clients it is someone that has come in to their shop or is on their web site

Conversion rate put simply is the number of leads that have bought…

If there are 100 quotes completed in a month and 10 become placed orders then the conversion rate is 10%. Once you know the figures you can look at brainstorming ideas to improve that 10%. By tracking the number of leads and conversion rate, applying different strategies and measuring the results you can have amazing results. A 10% increase in both of these will get you 21% more customers!The reality is that getting more leads often requires money to be invested and is an expensive way of driving up your profits.

A more cost effective place to start is with the people that have already bought from you. The stats are that it is 12 times cheaper to get someone to buy from you again that it is to get a new customer. By now you will be getting the message that measuring everything is really important J Getting more from existing customers is looking at how many times they buy from you and how much they spend each time; this is referred to as the number of transactions and the average selling value. As with the leads and conversion rate pick some strategies, implement them and measure the results.

If you get 10% increase in the leads, conversion rate, number of transactions and average selling value then you can start to get very excited as you now have a 46% increase in turnover.

WARNING: remember what I said at the start turnover is…. Vanity, please don’t ever just set targets that are turnover based!!!

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The last section to look at is your profit margins, this is what you are actually making once you have been paid and take out all of your costs. The simplest way to increase your profit margins is to put your prices up. This terrifies most business owners! The reality is that it is only a problem if you only compete on price – if that is the case then I suggest reviewing what makes you special very quickly! There are companies out there that will undercut you to squeeze you out the market so it is a very risky strategy.

Apart from increasing prices you can also look at controlling and reducing costs. I work with specialist companies that are fully trained to review these for companies over £250k turnover and it is an activity I highly recommend. For any sized company set yourself a challenge – can you reduce all of your costs by 10%?

By getting a 10% increase in profit margin as well as the other areas you are now shouting from the rooftops as you will have got 61% increase in profits. Now the reality is that it is unlikely you will get 10% in all areas some will be easier than others – the point is that by focussing on different areas of your business, knowing your numbers, testing and measuring new ideas and strategies you will get great results for your business.

Just in case you thought I’d forgotten than profit is only sanity you also need to check your cash-flow! If you haven’t got a cash-flow forecast or have no idea what one is let me know! The main reason most companies go out of business isn’t that they have a poor product or service it’s that they run out of cash in the bank! Make sure that you are getting the money in from your customers quicker than it is going out to your suppliers. Remember cash is reality…I have spoken to businesses that have £6 million turnover but are not making any money!

Which of the Five Ways will you start working on first?


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