How to increase profits… it’s the #1 question of any (wise) business owner.
After all, businesses exist to produce profit.
So yeah, it’s a worthy question to bring to the table.
Let’s start by bringing it back to the financial basics: Profit is the difference between revenue and expenses.
However, when we talk about profit here at Hendershott Wealth Management, we also consider profit in your personal life, where it’s the difference between stress and success, or between financial freedom and falling short of your dreams.
In this post, we’re going to talk about a framework that will—in most cases— lead to greater profits for you in your business and personal life… if you do the work.
(Yes, that caveat around doing the work is necessary.)
If you’ve been following us for a while, you know that as fiduciary financial planners we cannot, in good faith—or for legal reasons—make guarantees.
We make recommendations based on the evidence and best practices that are likely to lead to a positive outcome, but we cannot control the future or balance in your accounts. (Unfortunately.)
It is with great confidence that we share this framework with you, though, because not only is it the exact approach we use to generate profits in our own firm, but we’ve used it with every business owner we’ve worked with to help them increase their profits.
What it means to make your money work for you
We talk a lot about how to make money work on our podcast Love, your Money.
The ultimate goal? To make your money do the heavy lifting in the background so you can put the things that really matter in the foreground—like your family, joy, purpose, and peace of mind.
To make that happen, you need financial systems that are elegant, simple, and designed to support YOU.
This article is going to reference our framework, which we lovingly call The Profit Pyramid, as it relates to businesses, but know that the same principles apply to your personal finances.
Profits are what allow you to live a rich life, take vacations, and do more of what you love so that you can make memories—not excuses.
As a business owner and CEO, your focus should be on profits. It’s worth repeating: Businesses exist to produce profits!
Profits are what allow business owners to pay their teams generously. They’re what allow business owners to invest in their communities. And they’re what allow business owners to fulfill their greater purpose or vision, like ours at HWM to help people reimagine what’s possible, no matter their history with money.
As a business owner, you should be building teams committed to increasing profits, building systems that are profit-centered, and tracking the actions and activities that produce profits.
When you maximize the profits in your business, of course, that also maximizes the potential for generous personal income and abundant dollars in your bank accounts.
If you keep your focus on profits, everything else falls into place.
For the business owners focusing on top line revenue, we get it. Those numbers are bigger and sound way more sexy. But here’s the truth:
It doesn’t matter if you had a $100,000 launch if you spent $150,000 on ads, because that $100,000 in revenue actually netted a $50,000 loss.
That’s not how to run a profitable business.
They say that revenue is vanity, profit is sanity. But profit is even more than sanity.
Profit is the juice. It is the business owner’s raison d’etre.
You started a business so you could do more than get a job fulfilling someone else’s dream. You’ve given your time and energy and resources to this business you’re running.
As the CEO of your business, it’s important to focus on the right things. It is your job to measure, track, analyze, and strategize the things that make you money so that you can build a reliable, growing, and profitable business.
At Hendershott Wealth Management, we have witnessed the difference between business owners who understand this fundamental truth and make it work for them, and those that don’t.
When we work with business owners who focus on their profits, track their efforts, and make decisions by a customized set of indicators, they’ve got a reliable, growing, and profitable business.
When we meet business owners who DON’T do this, they’re inevitably overworked, overwhelmed, and underpaid.
We want to see you succeed, so we’re going to spill the beans on the not-so-secret systems that will turn your business (or personal finances!) into a profit-generating machine—so you can spend your precious time and energy doing more of what you love.
You can run a business where you dream in assets, instead of liabilities.
And you can live a life where you make memories, instead of excuses.
The key to increasing profits: The Profit Pyramid
Like a tricycle, a 3-legged stool, or in our case, a pyramid, you need all three components in place to create a stable structure.*
And, in the case of The Profit Pyramid we’re about to walk through, if you set these components up, honor them, and remain loyal to them, your profits and financial success should be inevitable.
But—and this is a BIG but—this will only impact your profits positively if you do the work, and that means doing all three things. So, let’s get into exactly what they are.
PART ONE OF THE PROFIT PYRAMID: Identifying + prioritizing your PGAs
Everyone in business has heard of KPIs, or Key Performance Indicators. But the fact that everyone has heard of them—and most small business owners still aren’t making use of them—means their meaning and significance has faded.
That’s why we use something different…
The new KPI: Profit Generating Activities, or PGAs
These PGAs—the first side of The Profit Pyramid—have nothing to do with golf. They refer to the actions you or your team take that eventually lead to profits. They evolve as your business grows, so they’ll change over time.
PGAs are important because clarity about how to use your time and resources is what leads to a lucrative business.
Life gets much easier when you focus on your Profit Generating Activities, and if you isolate your most profitable PGAs, you could soon find yourself working a few months out of the year and enjoying 7-figure compensation.
(Perhaps we’re exaggerating a bit. And that may not be your goal, but it was mine–and it is possible, because I did it!)
Remember: Profit is that magic space in between your revenue and your expenses.
If you want to be an effective strategist and increase your profits, you must use a data-centered approach to figuring out the activities that’ll lead you there. This is universal, whether you were born with a calculator or a paint brush in your hand.
Don’t worry, it isn’t as hard as you might think, but it may require changing a strongly-held mindset, like “my brain just doesn’t work that way.”
Because it can, and YOU can.
Tracking your PGAs drives you toward growth and optimization. Without knowing and tracking your PGAs, it’s almost impossible to build a thriving business.
When most people think of “metrics”, they think of numbers like podcast subscribers, social media followers, and newsletter opt-ins. Those are great numbers to know, but ultimately, your challenge is to know how you got those followers and engagement—so you can repeat the actions and grow.
Those actions are your PGAs.
Here are some examples of PGAs to track in your business:
- Number of Google ads you’ve placed or paid for
- Number of times you’ve “touched” a prospective customer, whether that be with a pre-written email, a face-to-face (F2F) strategy consult, or a gift you send them.
- Number of times you’ve asked people to “refer a friend”
- Number of offers you’ve made in your weekly newsletter, and the number of subscribers who clicked through to purchase
- Number of meetings you or your sales team has had with qualified clients
- Number of clients you received from that book you self-published
- Number of people you’ve asked to come work in your network marketing team
- Number of outbound phone calls made or DMs sent to qualified accounts
- Number of speaking gigs booked
Seeking out actions and activities that lead to profit in your business is a bit like being a private detective. Finding meaningful ways to measure success (and shortfalls) is not only critical, it’s your most important job as CEO.
As we’ve worked with business owners throughout the Money Blueprint® Program, we’ve seen proof of the reliable, growing, and profitable businesses they can run when they do the work to hone in on their unique PGAs:
>> The hairstylist who found that when she books a client’s following appointment at the end of their current one, she can directly tie that to higher retention, and therefore greater/more consistent profits.
>> The therapist who saw a spike in business when she sent out email newsletters, and therefore committed to sending newsletters on a consistent basis while tracking the increase of people reaching out for sessions.
>> The sales rep who took on a laser focus on her outreach activities and created accountability with her sales manager, instead of getting distracted by the fires that pop up on a daily basis.
TL;DR: Your PGAs are the activities that generate revenue in your business. And when you spend the majority of your time on those PGAs, business will most likely be more enjoyable and greater profits will be easier to come by.
Before we move onto part two of the Profit Pyramid, stop, think, and write down: What are some of your key PGAs?
PART TWO OF THE PROFIT PYRAMID: CHECK-INS (tracking + tweaking)
Identifying your business’ profit generating activities is a crucial first step to fortifying your Profit Pyramid.
That said, they won’t do you much good if you don’t know how to measure and track them.
Knowing how your PGAs are performing is what makes or breaks a business. The metrics that indicate your PGAs’ performance ground you in reality, and if you don’t have a finger on the pulse on what’s actually happening, you’re grasping at straws.
Which brings us to The Check-In.
It sounds simple, but miss this step in the Profit Pyramid, and nothing works. (Just like the other two!)
The Check-In is exactly what it sounds like: A regular and relatively frequent routine you (and your team, if applicable) has in place to measure, analyze, and strategize what’s happening in your business, specifically regarding the performance of your PGAs.
The more you understand your numbers, the more effective you will be at making the right decisions about how to allocate your time, your team’s time, and your company’s resources and focus–all which are finite.
Let’s go through a couple examples:
Let’s say you’re a real estate agent. One of your main PGAs is having coffee chats with past clients. You buy them coffee, get updated on their lives, and then ask for a referral.
In the last 50 coffee chats you’ve had, you received 5 referrals. That’s a 5/50 effectiveness ratio, or 10% conversion. Now you know if you want another referral, you need to set up a coffee date with at least 10 past clients.
Let’s consider another example: You’re a business consultant who’d like to make the sales of your recently published book one of your main profit generating activities.
You’ve sold 500 books so far, and got 2 clients directly from the sale of those books. That’s a 1/25 effectiveness ratio, or 4% conversion. Success would look like 4 more clients, so you need to sell 1,000 more books.
Taking that a step further, you have a keynote presentation booked at a local event where 100 business owners will be present. At the event, you sell 50 books. Now, you know you need 19-20 more events with 100 participants at each to hit your goal of selling the books to land clients and close out the year profitably.
The math and activities you focus on are going to be customized to you and what you do. Taking the time to figure this out will provide immense clarity about where your time is best spent, and directly impact your ability to tweak your to-do list accordingly.
📈 Need help determining and measuring your PGAs? Come do money coaching with me and gain a wild amount of clarity in just three months.
Email us at coaching@hendershottwealth.com with the subject line MONEY COACHING PGAs and a member of our team will send you all the details!
How often should you check in with your PGAs?
At Hendershott Wealth Management, we have a 30-minute team meeting every week – but it’s up to you to find a cadence that supports the growth of your team and business.
Our recommendation is to check in on your PGAs at least twice a month.
This doesn’t have to take long, especially once you have a reliable tracking method in place and a dashboard or system that provides the data at-a-glance.
The real outcome of The Check-In (if you do it right)
The Check-In is your opportunity to make things work better; for you to optimize the PGAs you’re prioritizing.
It’s not about judgment; it’s about curiosity.
It’s an opportunity to declare exactly how you’re going to fulfill your vision–and then go out and create a world that doesn’t exist yet!
That’s the magic of being in business, and the profound gift and opportunity of being someone whose life is about fulfilling a vision.
So don’t skip this step.
You probably know what we’re talking about when we say entrepreneurs are FULL of good ideas that get jotted down in notebooks, highlighted in Kindles, misplaced in Google Docs and even professionally documented in lovely calligraphy on a business plan you write at a big event and get very excited about… then forget even exists.
Relatable, right?
I, Hilary, have lots of calendared routines in my life now–but the weekly team meeting is the one that is responsible for the most MONEY in my life. It’s literally the most important 30 minutes of my week, and your Check-In needs to be yours, too.
Don’t just read this article and think, “oh, that sounds good.” Make a plan to do it. Because I don’t want the pain of being full of good ideas to be the only thing relatable about this step of the Profit Pyramid.
I want the profits that are generated when you actually track, check in, and tweak your strategy to be even more relatable.
If you want to hear even more about how our Check-In at Hendershott Wealth Management breaks down, you’ll find the nitty gritty in this episode of Love, Your Money.
PART THREE OF THE PROFIT PYRAMID: STAYING TRUE + ACCOUNTABLE TO YOUR WORD
Remember when we said this doesn’t create profits without your promise to do the work
That’s what the third side of the Profit Pyramid is all about: Staying true to your word and holding yourself—and those around you—accountable.
For us at HWM, this happens in our weekly team meeting.
We make our commitments, then show up to talk about how they played out–and how we can do better. For example:
For the promises you were able to keep, what worked well? What was the result? Was the result worth the effort?
For the promises you committed to but couldn’t keep, get curious and ask: What was in your way? What support did you need that you didn’t have? What could’ve gone differently?
Maybe you didn’t complete your promise because you forgot to schedule time in your calendar to do it and other things came up instead.
>> You commit to blocking time on your calendar this week.
Maybe you didn’t complete your promise because you didn’t actually know HOW to do it so you avoided it.
>> Your promise this week is to go find someone who knows how to do it and have them teach you.
One of the most important things to note here is this: Staying true to your word doesn’t always mean fulfilling all of your promises.
Hot take: Being accountable to your word does not mean being perfect.
If you didn’t keep your promises, it isn’t a question of whether you did something wrong or failed.
It’s about getting curious about what you can do differently.
You will not fulfill every promise you make, every single week. That’s a good thing. Because if you do absolutely everything you set out to do, there’s a good chance you’re not making big enough promises and have room to grow. (It’s small thinking.)
To be honest, when you hear, “I NEVER break a promise,” or “My word is my bond,” it’s worth raising an eyebrow.
Because if you’re keeping your word to other people no matter what, you’re probably breaking your word to yourself. That’s not okay.
The upside to “breaking” your word (yes, there’s an upside!) is that it encourages you to get out of your comfort zone, consider what success actually looks like for you, and recommit with promises that stretch you and serve your business’ PGAs.
This growth mindset means being brave enough to make big commitments, and giving it your word that you will give 100% of your effort to make it happen.
And, one more time for those in the back…
It does not mean hitting 100% of your goals 100% of the time. It’s about giving 100% of your effort, and then seeing what needs to change. That’s where the real growth and development happens. That is how you expand yourself and your capacity.
This reframe of what staying true or being accountable to your word means is one of the most critical yet under-discussed skill sets for CEOs.
Shifting your mindset around money, goal-setting, and accountability is critical to the success of your profit growth. If you’re feeling stuck in yours, we’re here to help -- for less than the cost of therapy.
Email us at coaching@hendershottwealth.com with the subject line MONEY COACHING MINDSET and a member of our team will send you all the details!
Don’t have a team? Set up an accountability relationship
This is anecdotal, but we’re confident saying that 99.99% of people (ourselves included!) cannot be relied upon to keep promises they make to themselves. It’s too easy to let yourself off the hook!
But if you have someone who is counting on you to follow through, it’s a lot harder to break the commitment.
If staying true and accountable to your word requires some external support, we get it.
And if a team isn’t something you have, we highly recommend finding an accountability partner; someone who’s as invested in growth as you are.
Make an appointment to meet with your accountability partner, close the loop on promises you made last time you talked, make new promises for the next time you check-in, and—most importantly—not let each other off the hook.
If you’re a solopreneur who works without a team, an accountability relationship is likely a free agreement you’re making with a business owner you trust, where you’re providing value to them and vice versa.
That doesn’t make them any less important than a paid engagement! If you want to see growth, you have to show up when you say you’re going to show up, do what you say you’re going to do, and hold your partner accountable to doing the same.
Just as your PGAs will evolve with time as your goals shift and you figure out what works (and what doesn’t), your accountability relationships will, as well.
But the most important thing is this: That you stay true and accountable to your word.
Generate Consistent Profits in Your Business
As a business, it’s your prerogative to produce profits.
That means you need to prioritize (and measure!) the activities that generate profit, and commit to doing the work it takes to grow.
Follow the steps outlined in the Profit Pyramid, and we have every right to expect that you’ll increase those profits. (After all–it’s working for us, and our business owner clients!) To recap:
Let your Profit Generating Activities dictate your schedule.
Not your email, not other people’s emergencies, not incoming calls or texts. During your business day, let your PGAs guide you.
Measure + assess your PGAs and results with regular check-ins.
We check in with ours weekly, but recommend at least twice per month. Pick a day of the week (or every other week) to circle up, track your results, then let those results–and your goals–inform your promises for the next tracking period.
Stay true and accountable to your word.
Redefine what it means to succeed with your commitments, so that you can give 100% of your effort without hitting the target 100% of the time. That’s what enables you to become MORE effective at producing profits with the same level of activity.
And remember – we’ve been talking about profit as it relates to your business, but conceptually speaking, you can also have profit in your personal life.
When you go from being someone who spends MORE than you make to being someone who spends LESS than you make and saves the difference, you know–and can feel–what personal profit does for you.
It means you no longer have to suffer your way through financial emergencies.
- When your car won’t start, you take it to the mechanic and get it fixed.
- When your water heater breaks beyond repair, you have the cash to buy a new one. (Without a week of cold showers!)
- And when your friends call and want to do a weekend in Vegas, you buy the tickets in cash, make the hotel reservations, and just go…no credit card hangover involved.
Sure, that last one is hardly a financial emergency. It’s more of a financial opportunity that you no longer have to deprive yourself of–and that feels just as good.
Profit is the driver of business. And if you adopt this framework for committing to generating profit in yours, we have every reason to expect huge profitability increases for your firm, and more money for you and your family.
Just how much profit CAN you make? Find out with the Profit Potential Assessment.
Listen, in today’s world, generating profits and personal wealth can be a straight up act of rebellion–especially for women business owners.
Most business consultants simply teach tactics to make more money; we’re the only ones showing you how to reliably CREATE more profits in your business and then (gasp) actually KEEP more of your profits for yourself!
If you want to know just how much you stand to gain, take our free Profit Potential Assessment. You’ll answer a few questions and unlock powerful insights based on years of research that will unlock your ability to grow your business profits and increase your personal net worth.
*Fun fact: All but one of the known ancient Egyptian pyramids have four sides. The base of a pyramid is a square, so there are four triangles that make up the faces of the pyramid. Our Profit Pyramid, as you may have noticed, has just three sides. Like that one Egyptian pyramid that turned out different from all the others, we’re one-of-a-kind, and that’s fine by us.
KEEP LEARNING
- 7 Steps to Wealth: A “Do this next…” guide showing you the exact steps for building your wealth
- Love, your Money episode: 3-Step Formula for Increasing Profits in Your Business: The Profit Pyramid
- Take The Profit Potential Assessment
- Sign up to get Money Love Notes from Hilary
