The way most people run their business, they are the last to get paid. Their wage is what’s left over after they have paid their bills and their staff. If there’s not enough to go around, they take a cut, or even worse, have to chip in from their own pockets to make sure that everyone else gets paid.
Is there another way? Yes.
To ensure you get paid first, you need to set-up your business in a way that makes that happen. The first step is to include your wages right from the start when you develop your pricing and profit strategy. What most people do when they set their prices is to look what their competitors charge as a guide to their own prices, and what’s left over after expenses is their wage.
By setting your wage before you set your prices, you can create a Gross Profit target for your business. This target can be achieved by:
1. Increasing Prices
2. Reducing Costs
3. Increasing Sales
4. A combination of all three.
Your selection of which combination of these options you will follow enables you to develop a strategy for your business.
The first option, increasing prices, is discussed in detail in my book Price: How You can Charge More without Losing Sales. If you need to increase your prices, you must do it in a strategic way to avoid an overall loss of sales.
The second option, reducing costs, if you don’t want to compromise your quality, includes strategies such as improving process efficiencies in the business and increasing productivity by investment in equipment or software and staff training.
Increasing Sales, the third option, can be achieved by utilising the Five Profit Driver marketing strategy, discussed in greater detail in The Five Pillars of Guaranteed Business Success. This is a leveraged strategy which will multiply your profits. A 15% improvement in each of the Five Profit Drivers will double gross profit.
By utilising all three options, rather than relying on a single strategy, a pathway to higher and sustainable profits is created which means you will receive the pay you deserve.
By creating a plan to achieve your Gross Profit target, based on your profit objective and your desired wage, you no longer will be the last to be paid in your business.
May Your Business Be –As You Plan it!
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Dr Greg Chapman is the Director of Empower Business Solutions and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success and Price: How You Can Charge More Without Losing Sales.
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