Imagine reaching a 15% net profit after compensating yourself with a market-based salary. While it might initially sound like a lofty goal, it’s not just a pipe dream. This could be difficult to believe when one can’t even reach double digits salary, but it is a reality for some companies. The good news is, it’s completely achievable. We will walk through three pivotal components that might be holding you back from reaching this figure and how to overcome them.

1. Specialization Over Generalization

One significant profit drainer is attempting to cater to everyone and every request that comes your way. An example of this is if you are doing project, maintenance, and service work. That is an example of trying to do everything. This will lead into a struggle to get real profitability. It’s time to shift gears. Instead of trying to be a jack-of-all-trades, focus on being the master of a specific area. When you try to be all things to everyone, you become nothing to no one.

Think about narrowing your focus and identifying your key customer and product. By honing on your expertise and catering to a niche, you’ll cultivate a reputation for excellence in that area of service. Once you focus on the key product/service and let go of the others, you can get your pricing model really on point.

2. Correct Pricing.

Another aspect to reach the 15% net profit margin, your pricing needs to be on point, which means you get the gross profit required. This involves determining the right gross profit that, when deducting your ongoing overheads, leaves you with your desired profitability. When you establish yourself as a specialist in your field, you gain the leverage to charge premium prices that reflect your unparalleled expertise.

3. Procedures and systems.

Robust procedures and systems are paramount. These processes streamline your operations, ensuring consistent, productive, and profitable delivery every single time. They’re essential for maintaining the quality and outcome that both your customers and you are looking for.

To summarize, incorporate the Three Ps:
1. Product: Select a niche to specialize in, positioning yourself as an expert in that area.
2. Price: Craft pricing models that reflect your expertise and net profit goals.
3. Processes: Develop efficient systems to consistently deliver quality and profit.

The journey to 15% is achieved with one percentage point at a time. Tracking and measuring are crucial as you cannot improve what you are not measuring. Make sure to monitor your net profit margin closely and focus on refining the details that can ultimately yield significant differences. If you’re not yet in the double digits, let’s get there first. Once you get to 10%, we’ll push to 11%, then 12%, and continue ascending. Small, incremental steps pave the way to lasting success.

If you would like some support in implementing the above, please be in touch. Your path to unlocking profitability awaits, and we are here to help you navigate successfully.

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