Rock LaManna08.18.15
Right now, there are literally millions of business owners just like yourself who are looking to sell. Yet, only a fraction of them actually complete a deal, despite plenty of buyers looking to acquire a successful business. The problem? These owners are focusing too much on growing their company and are forgetting about the bottom line. When it comes down to it, profitability is the fuel that’s going to make your engine turn.
So, how do you increase it?
Increasing profitability to drive sellability
Making your business more profitable doesn’t always have to come from huge changes. Sometimes, small adjustments can make all the difference.
Here’s an example: An industrial company had a sales mix of products, earning approximately 70 percent of revenue through sales of systems and 30 percent from accessories sales. However, when an outside consultant analyzed their margins, they noticed the company was placing its emphasis in the wrong place. The company’s sales of systems operated at 20 percent profitability, while the lesser sold accessories operated at 40 percent profitability. Seeing this as an opportunity, the company shifted its primary focus to accessories over systems. Suddenly, profitability began to grow.
How can you identify the same opportunities for increasing profitability within your own company? That begins with a SWOT analysis. I recommend analyzing your SWOT every year given the nature of competition, products and other factors constantly change. If you haven’t taken a look at your SWOT in a while, here’s a breakdown of the key questions to ask:
● Strengths – Assuming your strengths are profitable, can you further increase their profitability?
● Weaknesses – Can you outsource or terminate the issues or people related to low-profit margins?
● Opportunities – Are there new competitors that you should consider trying to beat out or even merge with to enhance your most profitable products?
● Threats – What is the most immediate threat to your most profitable product or service?
If you want to join the ranks of the successful minority who actually sells their business, you should make increasing profitability your number one priority. Sometimes, all it takes is identifying one key area for profit that can take you to the next level.
Rock LaManna helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic path. He is President and CEO of the LaManna Alliance, and provides guidance on how to grow a printing business, merge with a synergistic partner, make a strategic acquisition, or create a succession plan. Rock can be reached by email at Rock@RockLaManna.com.