Business finance, funding, overdrafts, working capital. Name it what you will, at some stage the…
How to Make a Profit on Every Transaction in Your Business
What would you say if I told you it’s possible to make a profit on every single transaction in your business? Don’t believe me? All you have to do is think a bit differently about the word ‘profit’. The Macquarie Dictionary contains numerous definitions of the word ‘profit’. The first is ‘pecuniary gain’. But, you’ll also find ‘to gain benefit’ and that’s the definition we’re interested in here.
When a transaction puts dollars in the bank it’s easy to see how you made a profit. You can even put a figure to it. But what about when a project goes a little – or a lot – sideways and you make a financial loss (and let’s be honest – it happens to all of us from time to time, no matter how strong our business is).
How on earth can you turn that into a profit? No, I’m not talking about some accounting shenanigans. The profit is in the lessons you learn. The profit is in getting to the bottom of what went wrong and addressing the issue so it doesn’t occur again. This is a profit that helps your business put money in the bank next time.
Here are some of the different ways your business can profit even when it seems like things have gone pear-shaped:
- Do you have a late payer who is defying all your efforts to collect? It’s time to review your systems. Try to develop a process whereby your clients only get the full benefit of your product or service after they have paid in full. For example, our authors must pay their final invoice in full before their books will be printed. No final payment, no books.
- Did you have a schedule blowout that cost you a lot of money? Find where the problem occurred. Was it someone on your team who might need further training or is perhaps in the wrong role? Is it a supplier who needs talking to or perhaps replacing?
- Did you buy a cheap piece of computer equipment that quickly broke down? There’s a great lesson about when to cut costs and when not to. Next time, spend the money to get better quality. It will save you money – and hassle – over time.
- Did you run a marketing campaign that didn’t work? Where was the problem? Did you target the right people with the wrong message? Did you target the right people with the wrong product or service? Or did you just target the wrong people? Learn from this and the next marketing campaign will put dollars in the bank.
For this to work, you must believe that you are responsible for everything that happens in your business. Yes, everything. Don’t blame your problems on your supplier – you chose them. Don’t blame your problems on a client – it’s your job to make everything go smoothly, not theirs.
The flip side of this is, if you’re responsible for everything in your business, you also have the power to fix things. If your response when the wheels fall off is to sit back and blame everybody else you won’t be able to fix anything and you’ll have the same problems over and over again … because the problem is you.
It’s also about keeping your cool when you make a mistake and looking at things dispassionately so you can extract the lessons. The only people who never make a mistake are those who never try anything new. As a small business owner, that ain’t you. Mistakes are an important part of the learning process – if you pay attention and do actually learn from them.
Business, like life, is often two steps forward and one step back. There’s always a lesson in every mistake or problem and success is created by learning. Every successful business has evolved over time as they have figured out what works and what doesn’t.
If you absorb these lessons and act on them, you can make a profit on every transaction in your business – whether you actually make money or not.
“The opinions expressed by Smallville Contributors are their own, not those of www.smallville.com.au"
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