How do I make profit and pay myself also?
I don't make much profit nor enough sales
I don't make much profit nor enough sales
Your question is too general, my answer will be general too.
Sales - cost of sales - overheads = profits Profits x cash conversation rate = cash.
So you need to increase sales, reduce cost of sales, reduce overheads, increase cash conversation rate to increase profits and have good cash to pay you.
Thank you for your feedback. Ok let me try to break my question down. I feel there must be some pointers I'm missing out on how to sell more ,how to attract more clients and even boost my sales. It's been a cycle of putting back every amount I make into the business and not being able to set aside or take out my profit or my 'salary' and want you to guide me more specifically on how to overcome these challenges please.
Would it be good to tell us your business first? Act least tell us about a) nature of business, b) customer, c) which item traps your cash most, d) revenue model, e) major complaints from customers, f) value proposition, g) delivery model, h) share your most current marketing campaign in generating leads & sales conversation.
You need to minus your Cost of sales from your selling price and what remains is your gross profit. From gross profit you minus your operational expenses including Tax and you are left with Net profit. As small business owner you need to decide how much you need to pay yourself based on how much business the make than to treat net profit as your salary.
a) About my business, im into customised services of gift items and food for individuals ,family and corporate meetings though not on a large scale. b) My customers are not ordering daily but as and when the need arises.c) The food for now. Ive recently introduced a signature household product which is doing fairly well. Eventhough it's not fetching daily sales, on a weekly average yes but not large numbers as yet.there's a second which is a group meal and also fetches well but also doesn't currently make weekly sale.d)The revenue model is now on the new product and group meal and I'm working on how to get a regular request for it. The pandemic and aftermath have slowed down requests. e) client complain has been about delivery charges, i use a third party. The inconsistent customers complain about the cost of product. f) more aggressive and innovative on socmed ,however, how do i encourage customers to spread the word some more without beigh overbearing? g) 3rd party dispatch riders or courier and bolt which charges full fare. h, marketing my products and services on my status and instagram stories.
Your answer clearly demonstrates you are still at the early stage of your business and trying to look for what model is best for you. In short term, you can increase profit by doing food delivery yourself. This will drain your energy, so you should narrow your business focus to selling only a few very profitable products (don't overstretch yourself)
Concurrently, try to find some time weekly to review and improve your business model. Your business model is badly designed. Before you even talk about selling consistently and making profits, you need a correct business model that is repeatable. Your current business is hard to repeat as you adopt a 'customise' approach. In addition, you can scale your business only when your business model is scalable - which is not the case now.
In short, at least weekly, spend 4-8 hours shaping your business model. Suggest you read up 5-10 business model books. At minimum have a good product-market fit before you decide to increase your scope of work and investment.
Profit is Intangible and Tangible; You could include yourself as Seld-employed Personnel in your Organisation and take Salary.
Profits are made by Knowing real- needs of others, your Talent base, Ability to merge Tangible and Intangible Profits for self and Adequate support-Systems.
Some Services as Education, Judiciary, Medical and Media were and are supposed to be Non- mercenary- when in these Domains, commercial gain is secondary
Include yourself as Self- employed on pay scroll and take Salary.
Catering is akin Medical service- financial gain cannot really be expected; Restaurants serve Basic Needs as Justice and Education rights- profits are mainly Intangible
Alright then points well noted and thank you. I'm unable to answer directly to any of you, as it doesn't give me such options, but let me try this. @ Queck, can share a few links to proposed business models you will like me to look at as that will be helpful. Everyone around me is offering the same services and that's one of the reasons I preferred the customised option /approach (i don't cook and waste any product nor service) so apart from the business model, how can I improve on what I'm currently doing? I feel you will understand better when you see me in action Any other suggestions are welcome from everyone and kindly break them down in simple terms for easier understanding and adoption. Cheers
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Your question wasn’t too clear because I don’t know the stage your business is now and if you’re still a startup. Too often startups are focus on how to pay themselves and still be in business, but I’d suggest you take your business as a toddler and feed it to grow to a stage where it can stand on it’s own. This is my formal, keep reinvesting your return of investment and drive toward scaling your business for some years then you can stay paying yourself.