In Part 1 of 5 Actionable Strategies to Increase Profitability of Your Business I provided you with the first 2 strategies I implement as a business owner as well as for my clients.
Let’s recap:
Strategy 1: Review your profit and loss statement regularly
Strategy 2: Calculate your profit per client and project.
The 3 strategies I will share in this article are part of the foundation for a profitable business.
Strategy 3 – Forecast talent needs
Specialized talent acquisition can be difficult at times. This can destabilize the business by delaying projects. This is where talent forecast comes into play.
When it comes to the health of your business, you can compare talent forecast to prevention! It prevents your teams becoming so overwhelmed that it hurts your business.
Talent forecast reporting reflects your team’s capacity and upcoming changes in workload.
There are 4 main objectives for talent forecasting:
- To plan and start hiring in advance when there is a foreseen increase in workload
- To onboard more projects and clients when current projects are close to the end
- To reduce the team when there is a forecasted decrease in workload
- Ultimately to optimize resources in correlation with workload to increase profitability.
Here’s what you need to do to effectively forecast your company’s talent needs:
- Understand and document talent capacity
- Understand and document projects budgets and how they translate into talent needs
- Develop a predictable sales pipeline and process
- Correlate all these into a report to show the current and upcoming talent workload at a glance
There are tools available to quickly create this type of reports. However, a spreadsheet will suffice if you are just starting or have a small team. What’s most important is to take action today!
Strategy 4 – Processes and templates
This strategy is not as straight forward as the others. It may require a bit more of an upfront investment. However the benefits are immediate.
I’m a big fan of processes and templates. They transform businesses to predictable machines and give time and money back to business owners. One of the reasons I advocate for processes is that they facilitate replication. This means that you can do the same thing over and over again and generate the same results.
Processes eliminate guesswork and increase work efficiency. This results in less resources needed. Further on, this means lower costs and higher profit. You can consider templates and checklists as members of the same family. They have the same positive impact as processes on profitability.
When it comes to creating processes, I recommend you prioritize the most time-consuming activities.
- Start with those processes that have the highest costs on your P&L.
- Improve them with every iteration. Look for opportunities to cut steps and make them more cost-effective.
- Track progress over time and see how the same work can be delivered with lower costs.
You can take a similar approach when it comes to templates:
- Assess the deliveries that happen regularly and take significant time to do.
- Turn them into a template.
- Next time you deliver the same, start with the template.
What is the result of using templates? You will save precious time. This will ultimately be reflected as increased profitability on your P&L.
If you’re wondering what kind of templates to create, here are some examples that will save you a lot of time:
- Service delivery documents
- Internal or external reporting
- Emails you send regularly, internally and externally
- Meeting agendas
Yes, you will need to invest some time in the beginning to create both processes and templates. But in the end, you will gain far more time than you invested.
Strategy 5 – Leverage technology
If you haven’t already, look for ways to incorporate tools into your workflow. They reduce costs by eliminating the need for more expensive resources.
You can begin by looking at activities that can be easily automated. This refers to activities with clearly defined rules and triggers. My favorite example is using a scheduling tool instead of hiring a virtual assistant.
Here’s why!
Consider how inefficient it is to go back and forth on email to schedule a meeting. What would that cost your company? I bet those hours could be spent on something more valuable.
Instead, try using a scheduling tool. You save money and the job is done 100% accurate.
Another way to look at this is to audit activities that require a significant amount of time from your highly specialized staff. Look for ways to reduce the time by adding a tool into the mix.
What is the best example? Time and profit tracking for each project! This is why:
- You can delegate this process to your Head of Operations, create a spreadsheet, and invite the rest of the team to track their time manually.
- The Head of Ops can then manipulate the data and generate a variety of reports. It will do the job, and you will have visibility into project profitability.
But how much does it cost your company to generate these manual reports?
Compare it with cost of an average time tracking tool.
The tool will replace all manual reports and more at a fraction of the cost.
Years of working with remote teams taught me to leverage technology as my trusted assistant. It enables me to complete my work efficiently at an affordable cost.
Two extra tips for working with tools in your business:
- Don’t get absorbed by all the nice-to-have apps and tools.
- Just think in terms of the work that must be done and what tool can help you complete it in a cost-effective way.
BONUS Strategy 6 – Take consistent action
I know I promised 5 strategies for a profitable remote business and I delivered them to you. However nothing will happen without the 6th one. This is the secret recipe.
All the suggestions I make are based on my over 12+ years of experience working with remote companies. To be honest, not everything I tested worked like magic. In fact, some things didn’t work at all. However, from 1 to 5, these strategies have all been tested by me and proven to profitability increase. You can choose which ones work for you. I recommend combining them for an exponential positive impact on your profit.
If implementing them all at once feels overwhelming, take it one step at a time. Each month, you can add a new strategy. Start with strategies 1 and 2, then add the others. It is more important to be consistent over a long period of time, than to try everything at once and give up after a month.
If you constantly iterate on these strategies, your results will improve over time. When doing so, keep the following in mind:
- You need to always be looking for opportunities to make things more efficient.
- You need to balance between adding more talent to and keeping overhead under control.
- You need to invest in processes and templates without overdoing it.
- You need to create space for working on the business. This is the only way you will see opportunities to leverage technology and get to the next level of profitability.
In summary, consider consistency as the icing on the profitability cake. Without it, the strategies will have little to no impact.
Final thoughts on strategies for a profitable remote business
You might still not be convinced that implementing these strategies for your company is actually a good idea. And that’s ok!
The main benefits of these strategies, and that I can vouch for, are:
- These strategies will make your business antifragile. They will set up your business to function at the limit of efficiency if that is ever needed. This will only make it stronger during difficult times.
- Most businesses find it easier to keep more money than to make more money.
- Moreover, they will make it easy for you to make data-informed decisions, whether it is expansion or downsizing.
- On the other hand, there is absolutely no downside. I have never heard a business owner complain about too much profit.
You will not see these benefits come through for you unless you put the strategies into action! Start today!