How to create a PROFIT CULTURE

Many business owners focus on expanding their business, thinking that this is going to make them successful, rather than concentrating on how they are going to make a profit.  They sacrifice profit for growth, instead of understanding that it is in fact profit that leads to growth!

Business owners need to avoid making some of the following hasty and common mistakes in their search to quick profit:

  • Installing a new, expensive IT system and upgrading the current IT equipment.
  • Upgrading the business premises either via a purchase or lease; even redecorating
  • Purchasing of non-essential or under-utilised capital items
  • Underestimating the drain on cash resources of offering larger customers payment terms and settlement discount
  • Underestimating the cost of the increase of investment in working capital
  • Rushing into hiring people without evaluating the overall need.

If business owners were to prioritise profits and put profit at the centre of their decision-making, the above mistakes would be avoided;  they would instead be replaced by value-based decisions.

A key component of creating a profit culture is one of value-based spending.  spending that rand and getting a return represents good value;  spending that rand and getting less back represents poor value.  With this in mind, goods and services are no longer cheap or expensive;  they are either good value or poor value.

By adopting a profit culture, your money and resources should be directed only towards obtaining good value, no matter how cheap something appears to be!

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