If you run a company, profitability is your responsibility and you can't delegate it. Whether your revenue is increasing, decreasing or holding constant, shrinking profit margins have the potential to drive you under.

There are two ways that sales can pull down profitability and you already know what they are. Your products or services can be priced too low or your cost of sales can be too high. When your price is too low, it holds revenue down; when your sales cost is too high, it pushes costs up; either way the thing that gets squeezed is your profit. Both of these problems are relatively simple to fix; however, most women entrepreneurs are so busy they don't take the time to identify and resolve them.

Increasing Your Margins

First, let's consider the low price problem. Although it reeks of common sense, I'm going to say it anyway: "Not all sales are good." Closing sales for the sake of closing sales is a recipe for disaster. Good sales revenue is sustainable and profitable, rather than feverish spurts of sales at "whatever" profit. The worst way to gain market share is by being a low-price provider, because you set yourself up to lose customers as soon as someone underbids you. What you need are profitable sales that provide a solid return on your investment.

If you're like many women entrepreneurs, you'll say, "My current pricing is what the market will bear." Well, first of all, many women don't really know what the market will bear, because they've never taken the time and trouble to do a real market analysis. And, second of all, maybe you're looking at the wrong market.

Most of us want to grow and think the most effective way to do this is to "sell more of the same." However, this is often the wrong approach, and you need to consider ways to create revenue growth that are more profitable. Approaches that have worked for our clients include:

1. Marketing existing offerings differently
2. Modifying existing offerings to create premium-priced offerings
3. Developing new offerings at a higher price
4. Growing revenue through geographic expansion

Regardless of the method, selecting the right approach for your business and then executing it consistently can propel you to greater profitability in a short period of time.

Lowering Sales Costs

Besides increasing margins, you can enhance profitability by lowering your cost of sales. You do this is by analyzing and improving every element of your sales process. Yes, I know you may hate details, but consider what a 5-10% increase in profitability is worth to you and bite the bullet to do this. You can complete this task in five phases, each phase lasting about a month.

Here's what the process looks like:

1. Break down every component of your sales process from setting realistic sales goals through to collecting on outstanding accounts. (Document: Who does what? How? When? How successful is this step in the process? Where are the bottlenecks?)

2. Analyze, measure and determine the cost of every component. (Calculate costs for: leads, referrals, appointments, proposals and closed sales.)

3. Determine the gross profit of each sale and compare that with the cost of the sale. (Include costs for: marketing, advertising, sales staff, sales commissions and bonuses, and overhead.)

4. Determine which sales and marketing activities you can streamline, eliminate or delegate to lower-cost employees. (Document: How do your top performers do these tasks compared to others? What do your top performers consider a waste of time? What do they do that others don't? What do they delegate, or wish they could delegate?)

5. Implement these changes. (Make it happen: Document your new process. Rework your comp plan to reward profitable sales. Show your team how the new process will make them money. Celebrate the new process with a splashy kickoff and make noise when people are successful with it.)

Revamping your sales process can provide multiple boosts to profitability. It can increase the quality and quantity of your leads, shorten your sales cycle, create more selling time for your sales staff, and eliminate unnecessary overhead.

Play Your Trump Cards

Increasing your margins and lowering your sales costs can be just the trump cards you need to win the profitability game. On one hand, you increase your pricing by positioning your offering to provide the greatest value to your customers. Then, you lower your sales costs by analyzing and revamping your sales process. When you play these two trump cards together, it's easy to win.

The Rules of the Profitability Game

Higher margins + lower sales costs = dramatic improvement in profitability.

This Month's Business Growth Book

Yes, it's hard to find the time to read - but if you are not constantly reinvigorating yourself with new ideas and inspiration, you become flat as a leader. As a woman entrepreneur, you owe it to yourself and to your business to read at least one business growth book a month. This month's Business Growth Book provides you real world examples on how you can drive profitability by rethinking the value you bring to your customers.

Purple Cow by Seth Godin - This amazing little book slaps you in the face with examples of how you can't continue marketing the same old way. Godin paints real world examples of products that have been reinvented from a marketing perspective. For example, Dutch Boy revolutionized their industry by introducing a plastic paint "jug" to replace the old fashioned can that we've all hated for years. This jug with a twist-on, twist-off lid has sent Dutch Boy sales (and profits!) through the ceiling. You'll want to read and then re-read this fascinating 145-page book.

Copyright 2005 by Mary Cantando. All rights reserved.

Mary welcomes your comments, complaints, or compliments.

Contact her at www.WomanBusinessOwner.com