In prior articles, you may have picked up that making money, keeping money and investing money are all needed to build wealth as well as consistent action with well defined goals and plans.
So what gives…how come this article is simply about increasing income? Why is it “the” key?
What’s the first thing that happens when times get a bit tougher? You reduce expenses, you lay off workers, you cut your lifestyle expenses. The problem is that you can only cut so much. There will always be expenses. You can’t cut your way to wealth. If this makes sense, then the only way to build wealth is to increase income? Easy you say or in this case as I write.
Let’s look at an increasing income strategy and the one I like the most. Most business owners don’t understand the idea of a profit margin.
Your profit margin is the difference between the sales price of your product or service and your cost of providing that product or service. Yes, people providing services have a cost called time. If you sell a product or service for $100 and it costs you $80 you have a 20 dollar profit margin. From this 20 dollars you now have to pay your employees, pay the bills, and you are left with say $10 to feed your family. You might cut costs by $5 as I mentioned at the beginning and that will increase profit but once costs are cut there is nowhere else to hide. If business slows down more you have a real problem.
The simple answer: Raise your prices and create more income.
It didn’t cost you anything to raise your prices. That’s pure profit to your bottom line. Some of you may be thinking that you can’t raise your prices. This is a mistake in thinking. You can raise your prices, you should raise your prices and you will see that not only will you have a greater confidence and belief in what you are doing but that your mindset will change and you will focus on the customers who will pay that price.
When you raise your prices you make more money.
When you make more money you can take that money (KEEP IT) and invest it, pay down debt, two strategies that will allow you to build wealth and who knows? Maybe even stop working early.
For more information on Growing your Business by Design, creating financial well-being and steps you can take to grow wealth please visit our website at www.businessgrowthbydesign.com.
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