Frustrated that you are not taking home enough cash at the end of the month? I get it! Many firm owners come to me with their frustrations and they assume that MORE REVENUE is the answer. “Wendy, how do we dounle our revenue?” they ask.
In my experience, the solution is NOT more revenue. In most cases, the solution is higher margins. You cannot outsell a 25% margin!
So, lets talk margins. Do you know what your margins on your services are? You may offer 3 lines of service. If you only look at the average then you may have a loss leader pulling down your most profitable service SO I recommend doing a margin analysis by service line. This will give you the information to see where you need to pay attention.
75% margins are great, 50% margins are good and 25% margins are troubling. Where do your gross margins fall?
Once you have this data, now you can dive deeper to see whether in fact the low margin is because of pricing, write offs or cost of services. Most often, its a combination however, we must start somewhere in order to make changes. I do suggest starting at the top line – when did you last increase prices? I have several firm owners who have not increased prices in two years or more. It is time!
Reach out to me and lets review your gross margins and how we can put more money in your pocket!