Six Steps to Creating Profit

An insightful look at how you can put net profit income at the forefront of your small to mid-sized business

Enable you to make changes that will create a profitable, sustainable business future, Six Steps to Creating Profit authoritatively shows you how to maximize profit for your small to mid-sized, privately-held, service-based business.

• Shows how to avoid the business model where all income is devoured by expenses, leaving a valuation that would not render any measurable sales revenue if the business should be sold
• Discusses how to create a company where actual profit generation is one of the primary goals
• Provides the steps necessary to create "true" profit
• Features coverage of rules of operation, visibility in the marketplace, marketing, cash flow, and management costs

Demonstrating how measuring the results of change is vital and part of the ultimate, ongoing, profit-based solution, Six Steps to Creating Profit reveals how the before and after of each operational area is as important to evaluate as the intended change itself.

Foreword ix

Preface xi

Acknowledgments xv

Introduction 1

Chapter 1 Changing the Rules of Operation 7

Increasing Sales 9

Cross-Selling 9

Relationship Selling 10

Vertical versus Horizontal Selling 11

Expanding Your Market 12

Using Loss Leaders 14

Brand Extensions 15

Replacing Yesterday's Stale

Successes with Today's Winners 16

Decreasing Expenses 17

The Office 17

Cost of Goods 19

The Workforce 20

Streamlining Administration 21

Computerizing 22

Outsourcing 25

Standardizing 26

Revamping 28

In Summary 29

Chapter 2 Staying Visible and Connected 31

Increasing Credentials 33

The Basics 34

Awards 37

Employee Recognition 38

Growing Affiliations 40

Traditional Associations 41

Strategic Alliances 42

New Tactics 44

In Summary 45

Chapter 3 Maximizing Cash Flow 47

Keeping the Cash Flowing 49

Retainer Plans 49

Maintenance Contracts 52

Working with the Calendar 53

Managing the Workload 54

Scheduling Vendor and

Cross-Selling Income 55

Credit Planning 57

Knowing Your Budget 58

Including All Possible Income 59

Including All Known Expenses 60

Working to the Bottom Line 62

Job Costing 62

Time and Billing 65

In Summary 66

Chapter 4 Streamlining Management Costs 69

Changing the Back-Office Focus 71

Accurate Information for Ultimate Value 71

Guarding the Bottom Line 76

Information Sharing 78

Managing for Profit 81

Fixed Pricing 82

Hourly Billing 83

In Summary 85

Chapter 5 Raising the Marketing Bar 87

Networking 89

Online Networks 89

Blogs 90

News Columns 91

Web Conferencing 93

Forums 94

Webcasts and Podcasts 95

Covering All Bases 96

Laying the Groundwork 97

Blatant Advertising 98

Subtle Message Spreaders 101

Referrals 102

Direct Contacts 103

Strategizing 105

Starting at Ground Zero 105

Measuring Your Efforts 106

In Summary 108

Chapter 6 Making Everyone a Salesperson 111

Enlisting the Troops 113

Spreading the Message 113

Breaking the Mold 115

Being Excellent 117

Creating a Mantra 120

Knowing What’s Working 120

Finding What’s Wrong 121

Making It Right 122

Joining the Club 123

In Summary 124

Conclusion 125

Appendix A: The How-To Guide to Creating Profit 131

Deciding What Changes Should Be Made 132

Step 1: Changing the Rules of Operation 132

Step 2: Staying Visible and Connected 140

Step 3: Maximizing Cash Flow 143

Step 4: Streamlining Management Costs 149

Step 5: Raising the Marketing Bar 153

Step 6: Making Everyone a Salesperson 159

Appendix B: Scheduling the Changes 163

Checklist 164

Step 1: Changing the Rules of Operation 164

Step 2: Staying Visible and Connected 169

Step 3: Maximizing Cash Flow 171

Step 4: Streamlining Management Costs 174

Step 5: Raising the Marketing Bar 178

Step 6: Making Everyone a Salesperson 182

Worksheets 184

Reevaluating Each Area Over and Over Again in the Future 185

About the Author 187

Index 188

"One theme that runs throughout.... is that small companies need to focus more on setting up integrated, user-friendly computer systems that can help them keep track of what they're spending and earning." (Crain's New York Review, 29 April 2011)

"...teaches you how to promote long-term growth through both economic and personal downturns by staying visible..." (Government Opportunities, May 2010)

PATRICIA SIGMON is the founder of LPS Consulting, which helps companies manage IT systems through their entire lifecycle from planning to the introduction of new systems and integration with existing ones while providing training and in-house support. She is also the founder of David Advisory Group, which meets the needs of CEOs and business owners, whose excellence in service and product development requires expert practice management assistance to reap profits and sustain longevity. Six Steps to Creating Profit

Despite the difficulties of running a business, many owners of small to mid-sized service-based firms are able to become masters of their craft, boasting a long list of repeat clients and a stellar reputation. What's missing, though, is the most important piece of the puzzle, one of the main reasons you went into business in the first place—a good, healthy profit.

Finally, you can figure out why your business is no longer earning what it once earned or maybe even why your employees are making more money than you are.

Six Steps to Creating Profit helps you understand your business's weaknesses and confront the problems that exist and have resulted in a lack of profit. This savvy guide explores how you can promote long-term growth through both economic and personal downturns by:

• Replacing yesterday's stale successes with today's winners

• Staying visible and connected by increasing credentials and growing affiliations

• Keeping the cash flowing, knowing your budget, and working to the bottom line

• Changing the back office focus and managing for profit

• Putting online networking to work for you

• Creating a mantra and spreading the message

Everyone knows the recession is not kind to unprofitable businesses. It's time to stop "making payroll" and get past the roadblocks that are holding your business back from the success it deserves. Where other business books address everything you need to know to set up shop and get and service clients, Six Steps to Creating Profit: A Guide for Small and Mid-Sized Service-Based Businesses goes past the basics, equipping you to master the delicate balance of running a business and making a great profit. From the daily trials and tribulations of cash flow to what's up with your missing profits and shrinking sales, this is advice you can put to use right away for increasing sales, attaining business longevity—and realizing those profits.

Six Steps to Creating Profit

"In this easy-to-digest book, Pat Sigmon has created the advanced business management checklist that every small business owner should keep on their desk. She has captured hundreds of useable, practical, and easily implemented thoughts and tactics that will help the typical business owner reach their next level of growth and profitability. While no one could put all these suggestions into practice at once, putting them all into practice one at a time is a worthy business planning and execution exercise."
—Dan Kraus, President, Leading Results, Inc.

"In Chapter Six, 'Making Everyone a Salesperson,' author Pat Sigmon has done a masterful job laying out a step-by-step process on how to enlist everyone company-wide to think sales. This book is a must read for every small to mid-sized business owner who realizes that instilling a 'sales culture' is paramount to future growth and sustainability in today's economy."
—Chris Robinson, Regional Sales Manager, SugarCRM

"As a good manager, make sure you have several hours to read this book cover to cover . . . I found it difficult to mark my place and wait another day to read the next chapter. In today's unprecedented economy . . . every owner and key manager needs to know the facts that Pat has made so clear to us in these six simple chapters. This book is clearly a wakeup call to refocus on the reality of running our service based businesses for a solid return on our investment, every single day. Pat reminds us that not only is our economy changing daily, but also the way we all have been doing business is rapidly becoming obsolete."
—William H. Mills, Chairman and CEO, ClickBase Corporation