We often say "what you measure you can manage" and "what gets managed gets done". When it comes to achieving greater profitability, truer words cannot be found. The fourth way of growing a business, which is improving the effectiveness of the things that you do, is a vital part of assisting you to better manage the results.

We often talk about the importance of focusing your profit improvement strategies into some key areas. They are to increase:

a) The number of desirable customers
b) The number of times each customer makes a purchase, and
c) The average amount they spend on each purchase

These are the major areas that can be managed by measuring their impact on overall profits and the good news is they can be measured with relative ease.

Identify your Critical Success Factors (CSF's) by asking three questions: 

1. What are your most profitable products/customers and what makes them so profitable?
2. What resources are required to support your business?
3. What are the things that keep your customers coming back, recommending you and paying a good price for your product or service?

Once these questions are answered you should then plan on how you can monitor the effectiveness. For example recognising your Key Performance Indicators (KPI's) and placing more or less emphasis on each area depending on the trend.

At the end of the day a profit improvement plan is only effective if your return on investment (ROI), your net profit margin and your ank balance are improved simultaneously. Constant review and management of your CSF's is the key to sustainable profit and ROI over the long term.

And that's exactly what our Financial Performance Reviews and Business Health Checks are designed to help you with. For more information contact us on (08) 9228 0700 or email us at adviser@aspencorp.com.au