Volume is Vanity - Profits are Sanity

Which do you want?  Sales volume or profits?

I’d rather have the profits and I’m sure you would too.  It strikes me as strange that we reward sales volume…many times without rewarding the bottom line. 

How many plaques, medals, and awards are given for the highest sales volume for an individual, team, or company?  How many incentive programs are given for the person or people with the highest sales?  Thousands.

Do you know of any awards that are publicized and given to the person, team, or company with the highest profit?  I don’t.  If you do, email me (ruthking@businesstvchannel.com) and let me know so I can write about them!

One of your goals this year might be to keep the same level of sales and increase profitability by 5%.  Increasing your bottom line will take work.  It is much easier to increase sales…the simplest way is to just raise prices.

What if an increase in sales price is justified?  Insurance rates have risen, your employees want raises, gasoline prices are out of sight.  These do justify increases in selling prices.  However, a new competitor is in your market with lower prices…and they are backed up by years of experience in other markets and a cash war chest. In other words, they are buying their customer base and have targeted your customers.  Yes, they will increase their prices once their base has been established.  However, this won’t happen for at least two years.  What do you do?

First, you have to sell your company’s services.  Remind your customers that you get what you pay for and that to provide the quality service that is expected, extremely low prices are not justified.  They have to make it up somewhere.

Second, look at increasing productivity for the same level of sales.  This means that even though you have experienced increasing salaries, gasoline prices, insurance, etc. you do not have the option of increasing prices. You must increase productivity.

For those of you who have the luxury of prices and productivity increases, your bottom line should look wonderful at the end of this year.

Remember, volume is vanity, profits are sanity.  Make sure that your business is sane.