What's a profit margin?
Stephanie here. I'm talking about Profit Margins. Now, this term might seem obvious but I was so busy running my business in the early years that I didn't much pay attention to this or even want to know about it. Money was stressful to me (as I talked about yesterday over on my personal blog) so I stayed away from many money-related terms.
Profit margins. Let's break it down. Profit is the money you make AFTER you account for all the costs associated with making it. And margin is how much space is in between those numbers. The goal is that you have a large profit margin. There are many industry standards because people have figured out formulas by looking into the numbers of various businesses but I feel that there's always a way for you to make your own margins what you want them to be.
And to do that, you want to understand your VALUE. If you only focus on product or service you're missing a big piece of the puzzle and people will only value you for your product or service. How can you be a business that people will pay whatever price to be a part of? How can you be the BEST in your industry or even do things differently in order to open up your profit margin?
Many small businesses I know don't want to charge very much at first. And that's ok, if you're delivering a service that's not yet 100% figured out, then match your price to the value of your offering at the time. But commit to getting better. Create a deadline instead of doing work for less with no end in sight. Treat this as a training program and get as many clients as you need / can handle in order to grow but create a deadline for training to end. Otherwise you'll be burned out.
How can you increase your profit margins?
- First, know your numbers. Factor in your time, supplies, any costs associated with the production & selling of an item / product / service.
- Think about the value of the item to it's dreamiest customer. What is it really worth to them? Beyond what the physical value of the thing is. What does it allow them to do or to be if they have it?
- Get better at the entire customer experience. It's not just about the product. It's about your website and emails and booth setup and ability to sell. It's about creating an amazing experience for your customers.
Have a great day, friends!
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