Moneymaking Strategies – Leaking Profits: Article 2

We have just started talking about profit leaks in your business and how to plug up those holes and actually make some money. Our first article examined why you are in business. If you want to increase your profits, you have four choices:

1. Raise your prices. This is always the first strategy that business owners consider. Of course, it’s also the easiest. Just add a few more points on your price tag. But put your consumer glasses on and what do you see? Are you, the buyer, getting more for your investment, or just paying more? Gut-check every increase before you implement it.

2. Build more houses. Another obvious choice. But if you’re still working with the same profit margin, you haven’t increased your profitability, just your revenue. Essentially, you’re pouring more money into your operation without plugging up the profitability hole. If you had an oil leak in your car, would you just keep adding more oil as it ran out or would you plug the hole? Building more houses to bring in more money is just a refill, not growth.

3. Cut expenses. Okay, now we’re getting somewhere. You can always find excess expenditures. I’m not talking about buying shoddier materials or cutting corners. And I don’t want you to stop rewarding your high performing team members. But you can—and should—take a good look at your expenses to find opportunities for savings. Then, cut intelligently, with a scalpel, not a chainsaw.

4. Improve efficiencies. Here’s where you have the greatest opportunity to make significant progress on your bottom line profit. Your inefficiencies are the leaks in your operation. Drip, drip, drip. You continue to do things as you’ve always done them. Why? Because that’s what you know and it’s the way you’ve always done it. Can you see the hole in that logic?

There is a wide array of detectable profit leaks in today’s home construction businesses. No matter how efficient you are, I’m sure you’ll find some holes that are costing you money.

Over the next several weeks we will examine 23 of the most common leaks in your profits.

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