Many business owners are struggling because they don’t know the key questions, they need to ask themselves to increase their profitability. Join Jay on today’s Black Entrepreneur Blueprint podcast episode # 401 as he breaks down these questions and gives you some additional tips to increase profitability.
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BLACK ENTREPRENEUR BLUEPRINT SHOW NOTES – EPISODE # 401
Questions You Need To Ask Yourself (and have the answers)
NOTE: These formulas (1 and 2 – are just related to your product or service, not your overall expenses
- What are my gross product margins? (is the proportion of money left over from revenues after accounting for the cost of goods sold). Example: your product sells for $50, and your product cost is $10. You have a gross margin 400% ($40 profit with a cost of $10). That means you have $40 to use to market your product.
- How much money do I have to spend on marketing? What is the dollar amount per unit I can spend to make a sale and be profitable? Example: using the previous example; if you have $40 to market with, the less your marketing expense is the more profit you make. You can theoretically spend up to $40 on marketing and break even.
- How can I reduce my marketing expenses to help increase profitability? Create a marketing system that incudes a lead generation system and a fulfillment system. (Listen to episode # 397 “Three Quick & Easy Ways To Generate Leads For Any Business.”). Link to # 397 https://traffic.libsyn.com/blackentrepreneurblueprint/Black_Entrepreneur_Blueprint_397_-_Jay_Jones_-_Three_Quick_And_Easy_Ways_To_Generate_More_Leads_For_Any_Business.mp3 Example: If you have a predictable lead flow that you know will give you x amount a leads per month vs a haphazard system or no system at all.
- Am I pricing my product or service correctly? Many times, we tend to underprice our products or services and in essence we’re leaving money in the table. The way you price your product correctly is – by aligning your positioning, your product perception, and your pricing. Example: high end – mid priced – low end. Everything must be aligned to make a sale. Beats for high end, Macy’s for mid-priced, Walmart for low end. (For more detailed information go to episode # 341 “How To Make More Money In Your Business – Product, Perception, Pricing, And Profit” https://traffic.libsyn.com/blackentrepreneurblueprint/Black_Entrepreneur_Blueprint_341_-_Jay_Jones_-_How_To_Make_More_Money_In_Your_Business_-_Product_Perception_Pricing_And_Profit.mp3
- Do I have a platform? Are you able to communicate with your audience when you want to and what type of media are you using? The least expensive media is “owned media” so if you could communicate to your audience with owned media that can reduce your marketing expense and increase profitability. The three types of media are owned – earned – paid. Example: If I had a list of 20,000 email subscribers I could market to them for free because I own and control that platform.
- Can I raise my prices? The answer is yes if your positioning, product perception, and your pricing are aligned. See question # 4
- Can I reduce expenses? Many times, we have too many expenses that cut into your net profits. Some areas of reduction may be software, office space, employees (can you automate your business and reduce employee cost?).
- Can I sell more units? Think about how you can sell more units. Do you have a way to leverage sales like an affiliate program, collaborations with other businesses, leverage automation, can you customize your sales pitch to sell to different verticals? Example: I sell insoles specifically for waiters, insoles for runners, insoles for field hockey (not sports in general, you want to identify and specify who you are selling to and why), basketball players.
- Am I investing in myself to improve my business? If you’re not going forward you’re going backwards, there’s no such thing as standing still. Invest in resources like trainings, masterclasses, workshops, and courses to elevate your entrepreneur IQ.
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