A Strategic Guide to Profitability: How to Be More Profitable in Your Business Now

Summary: Have you ever wondered why, despite all your hard work, your business isn’t as profitable as you hoped? If you're tired of spinning your wheels and not seeing the financial results you deserve, it's time to shift your approach and unlock the true potential of your business.

Profitability doesn’t happen by chance—you need to plan for and work towards it intentionally. If your business has been struggling to turn a profit, or you're ready to take your profits to the next level, we will dig into practical strategies you can implement immediately to increase your profits.

These practical strategies include pricing smarter, improving your team’s productivity, and identifying the most profitable areas of your business. I use these strategies with my clients all the time, and they’re proven to work, no matter the size of your business.?

Profitability Isn’t a Reward, It’s an Intention

Let’s get one thing straight: profitability isn’t a prize you win after years of hard work. It’s a choice you make from the beginning. If we can get away from the concept that profit is a reward and embrace the concept that profit is intention, everything changes. Profit results from your decisions, not something you hope will show up later.

Many of us have been led to believe that if we keep grinding, some magical moment will arrive when we’ll finally see profits. It’s like waiting for the “profit fairy" to appear and say, ‘Ding, you’ve earned your profit!’ But that doesn’t happen. Profit isn’t a reward for effort—it’s the outcome of intentional planning and actions.

The mindset shift here is simple: expect profitability. You don’t wait for it; you plan for it. The key question is: How small can your business be while generating healthy profits? This asks you to consider how lean your business can be while bringing in strong profits. The goal is to be profitable as soon as possible, even if your business is small. This idea challenges the belief that you must grow big before making money.?

When you prioritize profit early on, you're setting your business up for sustainable growth. By focusing on profitability from the beginning, you’re building a foundation for long-term success. Prioritizing profit ensures your business can survive and thrive over the long haul. You’ll avoid the pitfalls of cash flow problems or the need for constant external funding.

The sooner you build profit into your business plan, the sooner your business can start funding its success. This means that when you design your business model to generate profits early, you allow your business to grow using its resources. You won't need to rely as heavily on external funding, loans, or outside investment. Instead, the business itself will generate the cash you need to grow. This approach makes your growth more sustainable and less dependent on external factors, giving you greater control over your success.

So, stop waiting for profitability to show up magically and treat it as a goal you control. When you do that, you’ll feel more in charge of your business's financial future, and your business will be on a solid path to long-term success!

Know Your Numbers: Gross Profit and Net Profit

If you want to improve profitability, understanding your numbers is essential. Gross and net profit are key metrics showing how well your business manages costs and keeps money. These numbers give you a clear picture of your business's financial health and help you make better decisions. Once you understand them, you’ll have the power to find areas where you can improve and boost your profits.

Gross Profit: This is the money you make after subtracting the direct costs of producing your products or delivering your services. Even in a service-based business, you still have costs, like paying employees or paying for software. Your gross profit margin—the percentage of money left after covering those costs—should be at least 60%. If it’s lower, it's time to dig into your expenses and find areas to improve, whether cutting costs or raising prices.

Net Profit: Net profit is the money that remains after covering all your operating expenses, such as salaries, rent, and marketing. Think of it as your business’s actual profit after everything is paid for. A healthy net profit margin usually falls between 1-10%, but you can push that number higher with smart adjustments. In fact, our clients average 38%. The truth is that the more you keep, the stronger your business becomes.

Common Roadblocks to Profitability

Every business faces profitability challenges, which can sneak up on you if you're not paying close attention. Understanding the most common roadblocks allows you to spot your profits slipping and take action before it becomes a bigger issue. Ignoring these factors can lead to financial struggles, even if your business seems to be doing well. Addressing them now will give you more control over your business's financial health and help you safeguard your profit margins.

Here are three major areas that tend to hurt profitability:

1. Stalled Growth: Growth is essential to keeping your profits on track. Your revenue might stay the same when growth stalls, but your expenses don’t stop rising. Rent, utilities, wages, and other overhead costs slowly increase, eating away your profits. This makes it harder to maintain healthy margins and can lead to financial strain over time. Recognizing stalled growth early allows you to take steps to re-energize your business and protect your bottom line.
2. Rising Costs Without Adjusting Prices: Every business experiences rising costs—whether due to inflation, increased material costs, or higher wages. Your profit margins will shrink if you don’t raise prices to match these increased expenses. Many business owners hesitate to adjust prices, but failing to do so can erode their profitability. Regularly reviewing and adjusting your pricing is crucial to controlling your profits and ensuring you're not undercutting yourself.
3. Productivity Problems: If your team isn’t working efficiently, you waste time and money. Low productivity drains resources and reduces the value you’re getting from your staff. By improving how your team works, you can increase output without overburdening them, leading to better profitability. Efficient systems and processes save time and help your team deliver more value to your clients.

Three Simple Strategies to Boost Your Profitability

1. Rethink Your Pricing

One of the fastest ways to boost profitability is by adjusting your pricing. Yet, many business owners hesitate to raise their rates because they fear losing customers. But here’s the truth: Most people will not notice a 10% increase. They just won’t. A small bump in pricing—around 5-10%—often goes unnoticed, but it can make a significant difference to your profitability.

I had a client recently who was extremely nervous about raising their prices by just 5%. They thought no one would buy from them again, fearing it would push customers away. Be careful with those ‘nobody will ever buy from us again’ thoughts. They are limiting and damaging to your mindset. I said to them, “Let’s try.” So we tried it, and guess what? People kept buying. That extra 5% allowed them to reinvest in their business and team. That increase went right back into the team, improving hiring and productivity. The result? A stronger, more efficient business with a healthier bottom line.

You might need a more aggressive price adjustment because it has been a long time since you raised your prices. In this case, we advise taking the time to develop a plan to support this price increase. Taking this little extra step sets you up for long-term success.

If your costs are rising, and you haven’t raised your prices in a while, now is the time to make that change. Don’t be afraid to stretch a little. You may find that raising prices covers rising costs and gives you the financial breathing room to grow.

2. Focus on Your Most Profitable Services or Products

Not all services or products are created equally. Some are your bread-and-butter, generating significant revenue, while others might barely break even. You’ve got to know where the money is being made. By closely analyzing your offerings, you can identify what’s making you money and draining your resources.

For example, when we dug into a client's service lines, we found that 40% of their revenue came from barely profitable services. These were also the services causing the most problems and stress for the team. We did a scatter graph showing that the bulk of the revenue was in the low-performing services. We decided to cut those underperforming services and focus on the high-margin ones. The result was that their profitability skyrocketed because they were no longer wasting time and resources on services that didn’t contribute to the bottom line.

This process also helped us spot opportunities for new services. We tried a new offering, which was 75% profitable. Yes, I said it. 75%! Sometimes, it’s not about cutting. It's about finding the hidden gems in your offerings that can lead to more profit with less effort.

3. Improve Productivity

Boosting productivity isn’t about making your team work harder but working smarter. Productivity and efficiency need to be part of your strategic plan. We see many businesses operating at only 50-60% capacity, meaning there’s a huge opportunity for improvement without adding more stress to your team. If we can move the needle even 10%, that difference in capacity represents a lot of profitability.?

In my first business, I struggled with long project times due to having a completely customizable service. We streamlined our project management process, making it more efficient and easier to follow. Instead of taking eight weeks to finish a project, we cut it down to four and started taking on new clients weekly instead of monthly. The best part? We didn’t need to hire new staff or increase overhead; we simply improved our workflow. This led to more clients, revenue, and, ultimately, better profitability.

The key here is that maximizing productivity doesn’t mean burning out your team. It’s about creating processes that make their jobs easier, leading to higher output. You can define processes to streamline your work even with highly customized services. When you do that, you free up time to take on more business, serve clients faster, and improve your profits—all while maintaining quality.

Stop the Profit Leaks

Every business has areas where profits quietly slip away, but the good news is that you can stop them. The two biggest culprits are overdelivering and reinventing the wheel with every project.

Over-Delivering: Going above and beyond for your clients is admirable, but you're giving away your profits if you’re not charging for that extra effort. It’s essential to value your time and expertise. You over-deliver? That’s great, but have you priced your service to allow that? If not, you’re unintentionally cutting into your margins. Review your pricing to ensure it accounts for the extra value you provide. That way, you can still overdeliver without undermining your profitability.

Reinventing the Wheel: Custom solutions are fantastic for clients, but if you’re recreating everything from scratch each time, you’re wasting both time and resources. Stop recreating the wheel! Even with highly customized services, you can define a process. Having a clear, repeatable workflow doesn’t reduce the quality of your work—it makes your business more efficient. Streamlining your processes allows you to serve more clients, deliver faster, and protect your profit margins without sacrificing the personal touch.

By fixing these profit leaks, you’ll be able to retain more of the value you create and keep your business running smoothly. Remember, the key isn’t just about working harder but working smarter.

Build Profitability into Your Foundation

At the end of the day, profitability isn’t just about having money left over. It’s about creating a stable foundation for growth, sustainability, and long-term success. By being intentional with your pricing, focusing on your most profitable services, and improving productivity, you can build a business that generates profits and fuels your long-term goals.

Remember, profitability isn’t something that just happens—it’s something you plan for and work towards every day. If you’ve found these strategies helpful, share them with another business owner who could benefit from them. Here’s to building a more profitable future!

Are you looking to boost your business's profitability and want help applying these concepts? Find a time on my calendar , and let’s chat!