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Profitable business

Five Things That Will Make Your Business More Profitable

Improving business profits is often a challenging project. There are a lot of moving parts in most companies. To get them all working together and delivering a decent bottom line can be frustrating. It leaves entrepreneurs wrestling with the question: How can I make my business more profitable?

There’s an approach that consistently delivers solid results

It’s proven approach and it works very well. Most companies can start implementing it right away. It’s a step-by-step process that certainly does involve some work, but it’s work that almost anybody can do. One thing you should be aware of is that an interesting challenge will appear right out of the gate. Solving this problem involves looking at it from a different viewpoint.

What’s next is a short Irish Parable that shines a light on a more practical, more powerful perspective. It opens up the shortest route to a consistently profitable company.

The Irish Parable

Not long ago over in Ireland three business-people arrived a couple of days early for a conference. They rented a car and set out for a day of sightseeing through the lush green countryside. As evening approached they became lost. They spotted a farmer up ahead on the road leaning on a fence and they stopped to ask him for directions.

“If you were going to Dublin from here, which way would you go?”

“Well”, the farmer replied, “if I was going to Dublin, I wouldn’t start from here!”

The three business-people didn’t like the farmer’s answer and they drove away, eventually becoming even more lost. As it started getting dark they spotted a country inn and pulled in. They asked if they could stay for the night. The desk clerk checked the guest register and replied that he only had one room left. The business-people then asked if they could pay with American money. The clerk looked up the conversion rate and told them it was $30.00. They each pulled out a $10.00 bill, paid the clerk, and they headed up to the room.

A while later the desk clerk realized that he’d made a mistake with the conversion. The room should have only cost $25.00. He called over the bellboy and gave him five one dollar bills to take up to the tourists’ room.

The tourists realized that they couldn’t divide the five dollars equally by three so they each took a $1.00 bill and tipped the bellboy $2.00.

Now each of the three guests has paid $9.00 and three times nine equals $27.00.

The bellboy has $2.00. His $2.00 plus the tourist’s $27.00 equals $29.00, not the $30.00 they initially paid.

Where did the other dollar go?

If you’re puzzled by this riddle you’re not alone, it stumps a lot of people. Although interestingly enough, once you see the solution it will never fool you again. Don’t worry, the answer to the vanishing dollar riddle is coming up. Keep reading and you’ll find it soon enough.

A lot of business-people find themselves in strangely similar circumstances. They work hard, they grow their business, but their profits keep vanishing and there’s just not as much money in the bank account as there should be for all the effort they’re putting in. On one level this seems like it should be easy to solve, but on another level there’s concern that you may never figure it out.

The solution comes to light when you look at the riddle from a different perspective. The front desk has twenty five dollars, the bellboy has two, and the three business-people have one each. That makes thirty. There never was a vanishing dollar. It just appeared that way because a rule of mathematics was broken in the telling of the story. The solution comes from using a different approach. When you forget multiplication and focus on addition the riddle solves itself.

Back to: How Can I Make my Business More Profitable?

It pays big dividends to revisit the title: how can I improve business profits and make my business more profitable? Let’s look at the challenge from a fresh perspective. Take the farmer’s advice and start from a different place. Perhaps then we can see the solutions that have been eluding us.

This might seem counter-intuitive, but people don’t own businesses. What they actually own are companies that do business with markets. If customers can give you their business and take their business elsewhere then realistically how can you own it?

Long-term success in business comes from a clear focus on building a strong company. Many owners focus almost entirely on the business the company is doing and that’s when their profits vanish. This is a lot more common than people expect. It’s all too common for a company to do a lot of business and not have any profits to show for it. That’s when people quietly wonder: how can I make this business more profitable?

Here’s a good place to start. All companies should be designed and built to profitably deliver value to their target markets. When business-people start with this in mind or adopt this perspective then the challenge of achieving long-term success becomes much easier to tackle. If they simply go into business and keep their focus on doing business then the vanishing dollar riddle emerges to frustrate them. Their expected profits don’t materialize.


The Five Key Elements of a Profitable Company

  1. A clear focus on a solid business opportunity where there are enough customers willing to pay high enough prices so the company can operate profitably. This sounds obvious, but the ability to identify profitable business opportunities – even within markets – is a learned skill set. In almost every market there are companies making exceptional profits.
  2. A marketing plan that effectively connects the company to the clients it’s designed to serve, and then continues on to build great relationships with them. A solid base of clients is one of the most valuable assets any company can have.
  3. Solid Financial Information Systems that provide good feedback so the owner can make adjustments as required and monitor progress. If a company has been up and going for a while and is doing a fair amount of business and their profits are still vanishing it is highly likely that they have poor or very poor Financial Information Systems. Typically when owners have good information they naturally steer their companies towards success and avoid the vanishing profits.
  4. A method for creating accountability and building responsibility in the employee leads to smooth operations and satisfied customers. Systems are always part of a strong company. Choosing a system to improve is a good place to start.
  5. A plan for creating and sustaining the kind of momentum you want your company to have.

When all five elements are in place you will have a profitable company. If the Irish farmer by the side of the road was a successful business person he would tell you to start by strengthening your company and then chase growth later. That’s the unexpected answer to: how can I make my business more profitable?

Strengthening your company is a straightforward project when you have a proven road map to follow.

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