No one builds a business and sets out to lose money.
But that’s where a lot of service business owners find themselves, many of them without even realizing they’re losing money!
If you’re building a profitable business, these are the rules you must follow to make sure your business is set up for success, financially healthy, and consistently growing your bank account.
Commandment #1: Thou Shalt Choose to Be Profitable
Profit is a conscious choice that you have to make for your business right now. You’re going to do this by using the Profit First formula: Sales – Profit = Expenses.
Instead of making your profit margin an afterthought, you’re going to build your business process around making profit your priority.
What you focus on grows, and by making profit your focus your profit margin will grow along with your sales, instead of you constantly playing catch up with payroll, taxes, and the rest of your business’s expenses.
Commandment #2: Thou Shalt Develop and Work the Plan
To make good decisions in your service business, you need to know your numbers. To know your numbers you need to have access to the right data.
Starting now, you will identify your fixed operating costs, such as rent, utilities, insurance, telephone, internet, etc., so you have an accurate amount for your monthly fixed costs. This is a crucial component of your budget.
Your budget should reflect your goals, and once you plug your numbers in it can give all sorts of insights on whether your plan is aligned with your goals or not.
Commandment #3: Thou Shalt Not Ignore The Story Your Numbers Tell
Information such as income and expenses, employees, customer information, inventory, marketing lists, vendors, etc. needs to be tracked.
You can’t improve your profit margin without knowing your numbers and your business won’t improve if you ignore the truth of what’s happening on the backend.
If your company isn’t financially healthy, you will have trouble borrowing money, expanding your business, making payroll, and even paying your monthly obligations…
And you can’t know for certain what story your numbers are telling you without paying attention to them.
Numbers don’t lie. If you don’t like the story they are telling you, it’s time to make some changes.
Commandment #4: Thou Shalt Understand the True Cost of Labor
From now on, you’re going to have a deep understanding of what a job costs to perform.
Every project will be tied to the true costs of labor and the materials involved, with a profit margin built-in from the start.
Without understanding the true costs of a job, you could be losing money without even knowing it.
Huge savings can be uncovered once you know the true cost of fully burdened labor for each of your employees.
Commandment #5: Thou Shalt Attract and Retain Customers
The lifetime value of your average customer needs to be paramount.
It’s always less expensive to keep the customers you already have than it is to go out and find a brand new customer, and when you keep your customers happy they are more likely to refer you to their friends.
You will communicate with your customers on a regular basis, become a trusted source of information, and create a culture of gratitude in your service business that keeps your employees motivated to deliver great results.
If you treat your employees well, they will, in turn, treat your customers well.
Happy employees will work harder for you and take a personal interest in your customers.
Commandment #6: Thou Shalt Charge What You’re Worth!
You will stop undercutting yourself and your value.
You deliver a high-quality service and excellent results for your customers, so you need to start charging what you’re worth.
By delivering a high level of service, you won’t be competing on price and will occupy a more valuable space in your customer’s mind, while increasing your margins and making your service business more robust.
Commandment #7: Thou Shalt Now Let Debt Choke the Life Out of Your Business
You will start paying off high-interest credit cards and debt starting today.
With a greater understanding of your numbers, you will have greater control of your expenses and will be able to avoid having your business work for your creditors.
By paying off a credit card and high-interest debt, your service business may save thousands of dollars each year in interest that can be added to your bottom-line profit.
Commandment #8: Thou Shalt Hire The Right Employees
Employees are the most important asset in your company.
Good employees can make your company very successful, but bad employees can make it go broke.
Bad employees can be a major profit leak in your business.
Your hiring process will start with writing an ad that spells out what makes your company different and what your advantage in the market is.
You will spend time interviewing prospective employees and get your team’s input on whether someone is a good fit for the culture you’re trying to build.
Once you hire someone, you need to be clear on what you need from them and how they can succeed and thrive on your team.
Commandment #9: Thou Shalt Stand Out!
Experts will always be able to charge more for their services than a business that provides general services.
Your customers don’t want a generalist. They want to know that they are working with an expert service provider.
Avoid being like everyone else in your market.
Your brand should stand out, your messaging should be different, your position in the market should be unique to you.
Same is lame! Be different.
Commandment #10: Thou Shalt Be Proactive About Taxes
It’s not what you make that matters, it’s what you keep.
You’re probably not taking advantage of every legal deduction, credit, loophole, and strategy and your accountant isn’t giving you proactive strategies and concepts to save tax.
The biggest mistake of all is missing out on proactive tax planning services.
If you fail to plan, you plan to fail. Fortunately, proactive tax planning services avoid this problem.
We’ll find the mistakes and missed opportunities that can cost you thousands – and then give you a plan for rescuing those lost dollars.