We all want to make more money as business owners. We got into business because we love what we do – many of us are technicians of our craft – but without making money, we wouldn’t be able to continue this. Making money is one thing, but being profitable is another. Most small business owners are nervous when they start talking about strategies they can use to add more revenue into their business because usually it is associated with them working more hours. What if you could become more profitable AND work less in your business? You absolutely can — let’s break it down.

Do An Expense Audit

The easiest place to start when it comes to building profitability into your business is to simply cut things that are not bringing in an ROI to your business, or search for ways to get a greater return on your investment if the expense is necessary.

To do this, pull your latest P&L and go down your expense category. Anything that is absolutely necessary, highlight in green. Things that are an unnecessary expense that should go immediately, highlight in red. Anything that’s questionable, highlight in yellow.

How To Eliminate The Expenses

The green items can stay. These are things that are necessary to run your business and essential to the growth of your company. Sometimes software, billing, accounting, and other expenses like rent and monthly utilities are necessary here.

The red items should go immediately. These are unjustifiable expenses. Quite often this presents itself as double subscriptions you accidentally purchased – like two Spotify accounts, for example – and had forgotten about or were unaware of. Sometimes it’s a purchase you made that was a great idea in the moment, but hasn’t turned out to elicit the results you wanted or needed from it. Cut these expenses immediately.

The yellow ones present you with a question: In order to justify them, can you get a greater ROI from them? Most times, this means you need to pick up your phone or send an email and ask – “How can I get a greater return from utilizing your service?” Questionable expenses that fall in here are things like your accountant and bookkeeper, or your credit card processing fees. Things like this are negotiable, or might have hidden things that you’re not taking advantage of that will help you get a greater ROI from them.

Remember, you can’t completely cut yourself to profitability, but you can make the road a little shorter. An expense audit is one of the easiest places to start.

Complete a Value Ladder

The Value Ladder exercise is one we use with our PDBM mentees when it comes to determining if they are using their time in the best way. As small business owners who love what we do, quite often we corner ourselves into doing some of the low value tasks because we simply love them. This might look like coaching a class, cleaning the bathrooms, or grooming the dogs. It’s why we got into business in the first place.

But as our business grows, it’s not necessarily the most valuable use of our time. Our responsibility shifts from technician to CEO, and therefore we should be spending our time on tasks that actually grow our business. Cleaning the bathrooms or grooming the dogs doesn’t grow our business. Sales and marketing, does.

How To Complete A Value Ladder

In order to complete a Value Ladder exercise, write down all the tasks you do in a day, start to finish. Do this for one week, or at minimum, 3 days. Include the amount of time it took you to do each task. Once you’re done, on a column right beside, list all the dollar value amounts for each task. If it’s an admin task, it might be something like $15/hr. If it’s coaching a class, that might be $20/hr. If it’s grooming the dogs, that might be $25/hr. If it’s setting up your Facebook ads and responding to leads, you might pay yourself $30/hr. These are all numbers shot off the hip, but you get the point.

This allows you to take an objective look at where you are spending your time, and what is eliciting the greatest dollar amount comparatively to what you are doing.

Once we have this, it will help you complete the next step: Your Staff Delegation Wheel.

Create Your Staff Delegation Wheel

Now that you’ve done your Value Ladder, take all of the lowest valued tasks, and we’ll start writing systems and procedures that would help someone new walking into the role complete them with success.

Once we have the systems in place, we can set out to find a hire to take on board for those tasks.

The Staff Delegation Wheel looks like so:

When we hire our staff member, we will put them through our onboarding or training process. This teaches them the systems and SOP’s we had just built. We’ll put them through an evaluation every 90 days (at max), and provide feedback and support to help them perform their tasks to the best of their abilities. This is a cycle that repeats itself.

The idea is that by creating your Value Ladder, you can see where your time spent is least valuable. We can create systems and SOP’s that will help ensure efficiency and consistency of our employees. We conduct evaluations to maintain quality and provide feedback and support to our employees.

This cyclical nature of our staff involvement in our business can free up time for you as the owner, so you can spend your time on more valuable tasks like sales and marketing. It also means you will need to do less micro-managing because you’ve taken the time to set the employee up for success.

Pick Up Small Wins

Lastly, if you want to make an immediate change to your profitability and your bottom line: Raise your prices.

This is one of the most overlooked ways to increase the bottom line of a small business without increasing any other associated expenses.

While raising prices raises a lot of fears in some small business owners, our mentors will walk you through a step-by-step plan to effectively do this without causing waves in your business.

If you’d like to sit down for a Brainstorm Session with our team and find out how we can help you build a more profitable business while working less, just grab a spot here. Best case scenario: You’ll walk away with a guided step-by-step process laid out for you to follow with a mentor. Worst case scenario: You walk away with a 3-step action plan you can implement on your own and grow your business. So, let’s chat!