The Profitability Code: How To Unlock The Profit Potentials Of Your Business

I am yet to come across any entrepreneur who seems to have had enough when it comes to making money through their business. Especially if you are an unusual entrepreneur [purpose-driven], you realize that the more money you make, the more purpose you can fulfill.

So, making money in business is not a luxury only a few should enjoy, but a necessity for every unusual entrepreneur.

But wanting more money in your business is not enough. The real questions is; “how do you make that ‘want’ a reality?” To answer this question has been the age long quest of every entrepreneur, business owner, manager as well as several business consultants.

The entrepreneurs or companies who succeed in business are those who have cracked the profitability code –a set of different elements, laws and principles that must be strategically applied.

Many entrepreneurs and businesses still struggle with profitability because they are missing one or more elements of this code or they are wrongly applying them. Knowing them and rightfully applying them is what this unusual article is about.

Let’s get started!

Cracking The Profitability Code –The Key To Making More Money In Business!

If you want to make more money in your business, there are two sides to cracking the profitability code that you must begin to focus on. There are universal laws/principles you must follow and there are peculiar factors you must address.

The universal laws/principles of profitability are;

• Value
• Marketing
• Culture

The peculiar factors that determine the profitability of your business are;

• Business factors
• Environmental factors
• Personal factors

Both sides of the profitability code must be rightfully aligned and strategically applied before you can unlock the profit potentials of your business. In most cases, the problem is not from the universal elements of the profitability code. Rather, the problem often stems from the peculiar elements of the profitability code. Why?

Because laws are laws, they rarely change. The only problem with universal laws is this; ignorance of their existence or poor application of them. But the challenge of cracking the profitability code greatly lies with you the entrepreneur, the nature of your business and the environment in which your business operates. These peculiar elements are what you need to really crack in order to make more money in your business.

But let’s tackle the universal elements of the profitability code first.

The Universal Principles Of Profitability

What are those universal principles that guarantee profitability in business?

• Value:

The first universal law of profitability is value. And it states; you will only GET as much as you GIVE.

It’s such a simple logic; you want money, so what are you going to give in exchange for it? Since money doesn’t grow on trees, how do you intend to get it without stealing? The answer is simple; provide something of value. Value is the solution you provide through your business, it could be a product or service or a combination of both. Without value, you are not qualified for profitability.

I have already written an unusual article about this law of profitability, so I won’t dwell much on it here. It’s called the origin of profits, click on the link to read it.

• Marketing:

The second universal law of profitability is marketing. And it states; your business will only go as far as your message goes.

Isn’t it quite obvious? The more people who get to know, like and trust the value your business provides, the more of them will likely buy from you. And the less people who get to know, like and trust the value your business provides, the less of them will buy from you.

The marketing that works is all about influence. So to apply the principle of marketing to your business, you have to focus on these 3 key areas;

• The message
• The medium
• The messenger

I have already written several unusual articles about this law of profitability, so I won’t dwell much on it here. You can learn more by clicking here to read more unusual articles on marketing.

• Culture:

The third universal law of profitability is culture. And it states; every company is the sum of all the people involved, without unifying ideologies a company is a mob.

Come to think of it; imagine if every person involved in your business was going about his/her own agenda, would your company ever make a dime? Obviously not!

Do your employees know why your company exists? Does your business have a big picture? Do they believe in the value [products/services] your company offers to the market? Do they all align to your profitability goals? Do they know and uphold the values the company stands for?

So culture is how you unify the efforts of everyone involved in your business towards the achieving profitability. Culture is the soul of your company. It is the thread that binds everything and everyone together. It influences behavior, defines expectations and inspires teamwork. Without culture, there’s no company, there’s only a mob!

How Does Culture Impact Profitability?

Culture impacts the profitability of your business in the following key areas;

• Customer service/satisfaction:

A company with a positive culture will serve customers better than one with a negative culture. And since your profitability rests in the hands of your customers, poorly attending to them can negatively impact your bottom-line.

• Product development/innovation:

Culture is contagious and this is why it must be taken seriously otherwise a company can cease to exist. Value as was discussed above is the first universal law of profitability, it is the product/service your company offers to the market. The culture of your company will determine the quality of the products/service it creates. Companies with great cultures create great products/services. And great products/services generate high profits.

• Synergy/Teamwork:

The greatest impact of culture on profitability is synergy. There is nothing as rewarding as a group of people working together to create something bigger than they could have individually achieved. Culture is the fluid that makes high performing companies deliver excellence. When everyone in your organization knows what to do, why it matters and how to do it, magic happens. And customers love a company where magic happens!

The Peculiar Elements Of Profitability

What are the peculiar factors that determine your company’s profitability?

• Business factors:

The first peculiar element of profitability is the nature of business you are into. Take it or leave it, some businesses are more profitable than the other. This is why the kind of business you go into is equally important in determining how profitable or not your company will become. So profitability is peculiar to the kind of business you do.

Every business has the potential to be profitable, but the degree or extent to how profitable a business can become is peculiar to the nature of business one is into. Some businesses have irregular revenue or sales cycle while some businesses have regular revenue or sales cycles. A business with regular sales cycle is often more profitable than one with irregular sales cycles.

No wonder cashflow is considered the most important word in finance. It is the relationship between revenue and expenses within a given period. If the frequency of expenses exceeds the frequency of revenue, then you have a negative cashflow.

Businesses with irregular sales cycles are more prone to negative cashflows because they have a longer cycle time. You have to live on your last revenue before the next and in most cases you might end up spending your last revenue while pursuing the next sales. But businesses with regular sales cycle have shorter cycle time and this means before you run out of cash, another sale has been made. In other words, it is harder to run out of cash if you own businesses with regular sales cycles than those with irregular sales cycles.

So the peculiar question you need to answer to be profitable in your business is this; “how often do you make a sale?” Or “what is the average timeline or gap between your previous sales and the next?” The longer the timeline or gap, the more prone to negative cashflow and the less profitable your business becomes. The bitter truth is this; businesses with a higher degree of repeat purchases/sales tend to be more profitable than those with lower degree of repeat purchases/sales.

• Environmental factors:

The second peculiar element that determines your company’s profitability is the environment in which your business is situated. This is when the saying “location matters” holds true. The environment in which your business is located defines a lot about your profitability potentials.

It determines the kind of business you will venture into, it determines the quality level of the products/services you will offer, it determines the price at which you will sell them, it determines the caliber of workers you will employ. All of these factors will either improve or hinder your profitability as a company.

The smart choice is to always analyze the environment before going into business. Check for profitability pointers and killers such as; the standard of living, the prevailing culture, the demography, the income level, the condition of other existing competitions, the religion, level of education, government legislations and many more.

The more receptive the environment is to the kind of value [product/service] you offer, the more profitable your business becomes. The less receptive the environment is to the kind of value you offer, the less profitable your business becomes.

• Personal factors:

The third peculiar element that determines your company’s profitability is you the entrepreneur. There are certain individual traits and habits that are peculiar to entrepreneurs that can improve or impede your company’s odd of becoming profitable.

As a business rule, the more knowledgeable you are as an entrepreneur about the kind of business you venture into, the more you increase your odds of becoming profitable. So having more experience, knowledge, passion and skills in a particular business can contribute to your bottom-line positively.

In business, there is no way you can exclude the impact and role of the entrepreneur in determining how profitable the company becomes. You are the driver of your business and to a large extent it will only go as far as your eyes can see and your legs can take it.

None of all the things listed above will happen by themselves, it takes you the entrepreneur to make them happen. It is still up to you to determine if your business will be profitable or not through the choices you make and the actions you take as the leader of your company. This is why you need to be up and doing; commit to personal development —learn more, do more and achieve more!

Your turn

How are you cracking the profitability code in your business?

What specific steps are you taking to make more money in your business?

 To what extent has the universal laws of profitability helped or hindered your profitability as a company?

To what extent has the peculiar elements of profitability aided or hindered your profitability as a company?

Share your comments, thoughts and questions below to add more value to the conversation. Thanks in advance, really looking forward to learn from your own side of the story!