Price, sales volume and costs – the three most important variables are higher profitability

There are three major variables in any business that directly affects your profitability. These are costs, prices, and sales volume. In only one of these variables, only a slight change of 1% can have a dramatic impact on profitability. This article explains why.

If your business makes a 25% margin and is able to increase its cost by 1% (which is easy), increase your sales volume by 1% (even easier) and reduce costs by 1% (most easily all three ), then its profitability will leak by at least 10%. Even if the margin is 50% higher, these three variables will only have a significant impact on your profits by just 1%.

How Do You Get These 1% Improvement? Incremental operations are carried out only in chunky pieces. Enhance the entire workforce to start working immediately on all these minor repairs. They all know a lot more about the details they deal with every day than you do.

Meet all departments and brain storms to see how they can achieve this 1% improvement. Fix the ideas. Then insist that everyone in the meeting takes the idea to work. Remember what you are doing and when you're hoping to reach your 1% contribution. Talk to a minute about the meeting, then watch the progress. Even if only a few people reach their 1%, they were far above the initial goal – and this would result in a 10% profit!

Defeat all success. make sure that everyone knows that someone is fit for the intended goal Seeking them to reward them financially or in another highly authoritative way that enhances their esteem in the body. A 1% contribution is a fantastic help to your profitability, so send them and your partners a luxury weekend at a selected venue. The good news will be very contagious, and soon there will be a lot more of their colleges going to make use of their 1% target.

The secret is to set small 1`% goals. If you set large, unavailable goals, you have no chance of collecting your collection.

At the end of the year we celebrate all the success. Then start over again as this is a never-ending process. If you want to stay ahead of your competitors, this process is indispensable. Nobody stands, continues to move forward.

Source by Mike Ellacott

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