Many businesses in the green industry that I have recently spoken with report that they are struggling as the cost of labor goes up and pricing continues to come down. As costs rise and margins fall, you have to know your numbers in order to thrive. Here are two ways to make sure you are focusing on the right numbers:
1. Not all revenue is good revenue.
Instead of focusing on revenue, focus on gross profit. Set a gross profit target for each transaction and track them as a team.
2. Make sure your operating expenses are predictable and contained.
The best way to do this is to have an expense planning session each month to go through the upcoming months budgeted expenses. At Swift Straw, we call this our “request for funds” meeting.
Once your team is focused on maximizing gross profit and your expenses are predictable and contained, then you can focus your energy on more granular ways to increase gross profit and decrease operating expenses. Since these two factors ultimately drive the net income of your business, this is a great place to focus to ensure that your business is not only surviving but thriving!