What is a Profit Loop?
It’s the loop that shows how Profits Lead To Growth and Growth Leads to Profit; leading to more wealth creation. But there are forces that try to take energy from your profit loop.
When you start, or started your business, you had a product or service that you have/had to offer.
Then you go find clients and customers for your business. You market to them.
Once you find them you provide your product or service to them for a fee.
If, and when, you provide your product or service, you subtract your costs and end up with gross profit.
Now you can pay yourself (hopefully)and pay employees. Of course, you have to pay interest you owe, if any, and the taxes that you are required to pay. Now you reinvest in your business like buying and creating more inventory; Market more to create more sales, to create more profit, to create more growth.
There are forces that create “profit leakage” that takes away from net profits under the current production or limits the speed at which a company can grow.
The Five Profit Loop Leaks that are avoidable mistakes are:
These are common mistakes. After all, folks don’t know what folks don’t know. This is true for all those around them, too; employees, business partners, business advisors, etc. Or maybe up to this point, it just did not make economic sense to go after the profit leakage. It just made more sense to go after more business only. That has changed!
Advances in processes and technology today, and breakthroughs being made continually, there are a few mistakes small and midsize business owners make that don’t need to happen anymore. It’s attainable and affordable. Not just for the larger companies. Even the small business owner can avoid these mistakes, and arguably is even more important that they do.
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