253 - The Importance of Profit-Driven Systems
On today's episode of the podcast we're diving into how different systems in your business can help you increase your profit and help you achieve your personal business goals.
Don't forget, I'm offering a free trial of the Profit Rx VIP Tier. You'll get a 1:1 with me, bookkeeping help, office hours and so much more, all part of the free trial, a $100 value, free for 30 days. Hurry, the free trial ends November 11.
Recently, I've interviewed business owners, like Haley Johnson and Rachel Greiman about their profit reports. Haley shared with me about how she was on a journey to make as much revenue as possible. Then last year, she felt like the script flipped and people were focused on profit. Rachel shared in her episode she didn't mind making lower profit as long as she was paying herself the money she needs to sustain her life and after that she is willing to spend whatever she needs to hire more and work less in her business to spend time with her family.
These conversations got me thinking about something that's been on my mind. When I'm talking about profit-driven anything, I'm talking about it in the context of you. What are your goals and what profit do you need to support them? It's about optimizing your margins in relationship to how hard you want to work and it looks different for everyone. You have to ask yourself, for example, is a task worth saving time on by having a VA do it, or is it more worth them spending that same amount of time on a sales-generating task. Sometimes we sacrifice profit in order to have more free time.
I teach this concept in Module 4 of Profit Rx (Your Profit Recipe) where I talk about finding your profit sweet spot where we compare hours worked to profit and revenue. Speed, cost, and quality - typically you can only get two of the three and I think the same applies to sacrificing hours worked for profit.
What do profit-driven systems look like?
1. They can look like keeping track of your numbers (reflect back on episode 251) so you know what your target for expenses is per month. You can also look at your list to decide what expenses are saving you time and which you aren't using (or using enough) for them to help save you time and money.
2. Managing your time and spending it on what's going to make the biggest waves in your business. This can look like off-loading lower value tasks (tasks that will make you less money than other tasks).
3. Clear communication with your clients and team. A lot of profit falls through the cracks if you aren't clearly communicating expectations.
4. SOPs - Standard Operating Procedures make it easier to outsource and save a ton of time. When your team saves time, you save contractor expenses.
5. Tracking KPIs - Key Performance Indicators. These are your metrics and these numbers supplement your bookkeeping. Your books tell you what's happened and your KPIs tell you where there may be issues so you can anticipate your numbers next month. This might look like sign-ups, email opens, conversation rates, etc.
Inside Profit Rx I teach this system to streamline your business. We set up your bookkeeping, then we set up your legalities to protect your profits, then we set up a cash flow system to pay yourself, your expenses, and track your profitability . Then we get into taxes, hiring and profitable systems as bonus content.
Looking ahead, in December we are launching our first ever done-for-you service offering. It's going to be a launch because it's going to be a cohort because we are onboarding our clients at the same time so you are all at similar stages in the process at the same time and we can offer optional group elements like live training. If you join the Profit Rx VIP Trial now, at the end of your trial we can asses what you've completed, what your best next steps are, is it better for you to stay in the VIP membership, upgrade to done-for-you services or downgrade to the Profit Rx basic tier.
If you enjoyed today's episode, tag us on social media @BradenAdamDrake on Instagram.
