If you wanted to plant fruit trees and your goal was to harvest the fruit, would you start by picking fruit from the trees? No. The tree hasn’t even been planted yet.

The point? A lot of times as business owners our focus is in the wrong place. We shoot straight to revenue and profit, but from our example above, we can see that this is like picking fruit that hasn’t even been grown yet.

Profiting, then, is as much about beginning at the right place as it is about making money. So, where does one start?

First, think of profit this way: P.R.O.F.I.T Proven Results Offer Financial Independence Today. The key operative in this acronym is “proven results”. A system cannot be proven until it is tried, tested, and measured. So, let’s begin by looking at a tried and true “Formula” for profit and grow our success from there.

The Formula

The formula is basic, yet highly overlooked. Let’s spell it out:

✔ Your (1) Number of Leads x (2) Your Conversion Rate = Total Number of Customers

✔ Total Number of Customers x (3) The number of Transactions x (4) Average Amount of Sales = Revenue

✔ Revenue x (5) Profit Margin = Profit.

The power of this approach lies in breaking the profit building process down into key parts. By doing this, we can apply techniques (we have over 400 and counting) to work on the parts.

Here’s how it looks in a simple example, where we compare the results of 10% improvements in the “5 ways” with a base case for the same business:

So, we see that some relatively small improvements can generate a massive improvement in profitability. Sign up for our Newsletter and see our full function Five Ways To Profit Calculator, which can help you and your business succeed!

The Key

The key here is taking things in the right order, and applying the right tools to the 5 ways to achieve these results. One of the most important things is staying away from advertising as your initial focus–it is rarely the right place to start.

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