Most businesses actually fail within a few years. The number one reason for this is cash flow problems.
Now, there are three factors that can contribute to cash problems in your business. One, you don’t have enough sales. Two, you have too many expenses. Or, three, you have a combination of factors one and two.
Today we’re going to focus on that first point, not enough sales. Using Profit First helps boost your sales by teaching you to work at your full potential and serve your best customers.
Identify Areas of Overspending
Profit First, in a nutshell, is a cash management system for businesses. It’s basically the envelope system that your grandma used for her daily budget management, modernized for businesses and bank accounts. It’s adapted to help businesses grow and be profitable from day one. That’s why we call it Profit First.
Profit First really helps you focus on prioritizing your spending and your sales. It works by forcing you to use the cash you have on hand to pay for things that are coming down the road, and then it teaches you to plan ahead and figure out how to bring in more cash.
So it helps you identify those areas of overspending inside your business that you may not have noticed before. Profit First helps you focus on your areas of overspending and leads you to creating a budget for your and your business. It works so well because what it’s doing is guiding your spending.
Find Your Specialty
Profit First helps you to decide what products to specialize in offering to your customer base.
Think about it like a doctor, right? If you get an earache, you go to the doctor, and he does his preliminary testing. Next, he might give you a call and say that he’s referring you to an ear specialist because you have a problem that’s too severe for a general practitioner to handle.
Which bill is higher? The one from your general practitioner or the one from the specialized doctor?
It’s going to be the specialized doctor who sends you the bigger bill because he specializes in a specific area. That’s the way it works.
And you know what? We gladly pay that because we know exactly what it is that they’re being paid to fix and work on. There are different doctors for kids and seniors and different kinds of illnesses and parts of the body.
We can apply these same principles we see in the medical profession to every single business, including quilt shops. Maybe you’re really good at putting together kits, or doing table runners, or King-size quilts. There are all kinds of specialties you can dive into. I’ve really just scraped the surface here.
But when we dive in and specialize in a certain area and really grow, it helps us to gain that specialty recognition.
Focus Your Spending
Now, building a specialty doesn’t mean you stop offering complementary products. You just don’t focus on them.
If you come across a situation where you’ve got to choose between buying your specialty product or your complimentary product, you should always buy your specialty product because that’s what you’re known for.
Focus your spending on what you’re recognized for. And as you become recognized as a specialist, people will gladly pay you more because you’re an expert in the problem they need toved You’re going to have an increased cash flow from raising your prices, and you’re going to find more people who want that specialized product. So the combination of increased sales and the increased price and the increased customers means you’re going to have increased cash coming in the door.
Spend Money on What Helps You Grow
As you are focusing on completing and fulfilling your obligations for your specialty, you will learn how to focus on where you’re going to spend your money.
The best way to get started is to download my free PDF: The Three Steps to a Healthy Quilt Shop. Narrowing down your focus really serves you and your customers better.
Watch the full video below.
Join Money Made Simple Academy at curtisaccountingsolutions.com. Money Made Simple Academy is a series of simple on-demand courses, tools, and live coaching that wipes away financial overwhelm in your quilt shop and life!