Struggling with profitability? Looking for a quick fix? Here are three quick tips to help fix your firm’s profitability problem.
1. Pricing Strategies:
I cannot stress this one enough. A simple change to your pricing strategy can have a near instant impact on your top and bottom line. We encourage our clients to present more value based proposals or proposals with pricing options. All improvements to your selling price will fall to your bottom line.
2. Match Capacity with Revenue:
Too few firms take the time to calculate their capacity and it’s a really simple calculation. If you need help, send me an email and I will send you a template to use. But it’s super important. If you are resourced to do $300,000 in revenue a month, and you are consistently doing $200,000 in revenue a month, you have more capacity than you are getting paid for!
If you are consciously carrying too much capacity, know that it is coming at the expense of your profitability.
3. Identify your Least Profitable Clients:
Everyone has them. Take the time to identify yours. If you discover that there is no way to improve their profitability (increase price or lower cost), create a plan to terminate. Time is the most precious resource in a professional service firm. You need to free it up to invest in more profitable relationships.