You may think that running an online business is a lot easier than managing a physical store. However, a lot is going on behind a virtual or digital operation. Even when you don’t retail physical goods but rather sell digital services, you might still find yourself stuck with the question: I know I’m earning a 6-figure income, but why don’t I feel satisfied with my take-home profits?
Well, chances are, you aren’t taking home enough profits at all – and today, I’m going to help you uncover why. But before we go on any further, let us first do a quick exercise.
Profit First for Online Businesses
Now, I want you to imagine life before you started your online business. Were you a salaryman? Were you working for a family business, running your own physical store, or maybe, unemployed? Whatever your career beginnings were or how you started in society, one thing is certain: You were dissatisfied with the way you were earning money. You felt that you could do and achieve more, and that is why you started an online business.
A couple months or years in, you’ve grown your business to an extent that it can support many things – clients, employees, suppliers, etc. – but not you. You have a 6-figure income business, but you end up taking home measly profits; you might not even be earning minimum wage.
Does the fault lie in your business? Is it time to increase pricing? Probably.
But not until you’ve tried the Profit First approach.
Increasing Online Business Profits Using The Profit First System
Most online business owners fail to see the real culprit behind low take home profits. The first thing they suspect is pricing, and so they decide to increase the prices of their services without due reason. Unfortunately, this is an erroneous solution, and the only thing this will do is drive customers away. You end up losing clients and crippling your business’s profitability even more. You wouldn’t want to do this to your business; you’ll end up with more problems than when you started.
Instead, I’ll introduce you to a more effective, enduring, and long-term solution: Applying the Profit First cash management system to your business.
Here are the basics of the Profit First approach:
- Review expenses for the past 6 months
- Identify non-essential spends
- Compare costs to yields
- Remove the unnecessary
- Strategically Allocate Monthly Revenues
If you want to know more about what it’s like to work with a Chartered Accountant and Certified Profit First Professional, feel free to reach out to Annette & Co. We’d love to give you some FREE advice on your current business practices!