Understand and improve profitability

Understand how much profit remains from your sales after accounting for the resources required to deliver them and all other business expenses. Examine different products, services, and customer groups to understand how they contribute to overall profit and where improvements are needed.

Estimate your break-even point: the sales level needed to cover both costs that rise with sales and costs that continue regardless of sales volume. Review profit in dollars as well as profit margins, and consider how pricing, discounts, purchasing, labor, and waste affect the results.

Make changes that improve the business’s ability to earn profit while preserving the quality, service, and capacity needed to keep customers and support future sales.