The KMA Way To Profit Growth – In 5 Steps

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Before setting out on the journey its worth considering the adage…

You’ll always have what you’ve always had if you always do what you’ve always done.

After all, to get something better change is almost certainly necessary and that isn’t always easy.  So read on for the KMA eay to profit growth in 5 steps.

 

Step 1 : Know where you are right now

 

If you don’t know what makes you money now how can you decide which way to go?

 

The 4 Ws are the key….

Which is your best customer / product / service  ?

Why are they the best?

What are the sales each year for that customer / product / service  ?

What is the profit* from that customer / product / service  ?

(profit is defined as – sales less the costs that wouldn’t exist if the sales didn’t)

 

 

Step 2 : Decide on the direction to go

  The-KMA-guide-to-profit-growth-SS-2

 

The challenge faced by each business is assessing each possible direction…

  • The benefits of success
  • The chance of success
  • The resources (mainly money and time) needed to implement
  • The time before cash starts coming in

 

 

Step 3 : What do I need before setting off?

Have a business plan / budget/ forecast  as this tells you what

  • you are going to DO
  • resources you will NEED
  • POTENTIAL PROBLEMS that may arise
  • you EXPECT the RESULT to be

 

 

Step 4 : Is this the right direction?

 

It is imperative to monitor performance throughout the business as it helps you know if you are on track and heading in the right direction.

The best way of monitoring performance is through Key Performance Indicators (KPIs).

To improve sales performance you need to know your sales process (or sales funnel) and then put in place the relevant KPI.

 The-KMA-guide-to-profit-growth-SS-3

Step 5 : Has it been a good month?

 

At the end of each month a business should be able to answer this question and most businesses will look at the profit figure and the bank balance.

 

The key is having quality financial information quickly.

 

KPIs help manage performance in key areas of the business during the month but

monthly management accounts are what’s really needed.

 

They won’t just tell you what the actual profit figure is, their real value to the business is being able to answer the questions…

  • Why have I made the profit that I have?
  • Is the profit what I expected or planned?
  • What is the profit figure likely to be next month?
  • How can I improve performance going forward?

 

……You are also now back at Step 1.

 

 

At KMA Accountancy we can help you every step of the way.  For more information give us a call on 0845 3370 572.

 

Disclaimer
This article is for general information only and no action should be taken, or refrained from, as a result of this information. Professional advice should be taken based on specific circumstances in each individual case. Whilst we endeavour to ensure that the information contained in this article is correct, no liability will be accepted by KMA Accountancy for damages of any kind arising from the contents of this communication, or for any action or decision taken as a result of using any such information.

Get in touch

0161 410 0020
info@kmaaccountancy.co.uk

KMA Accountancy
Progress House
17 Cecil Road
Hale
Altrincham
Cheshire WA15 9NZ

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