THE COST OF DOING BUSINESS HAS GONE UP! WHAT NEXT?

The World Bank puts Kenya as a growing economy with a 5% growth rate by the end of 2012. Despite of this, businesses are still finding it difficult to save, invest and execute their organizations growth plans. A good number of factors keep affecting the ability to generate our desired profitability from the rise in energy prices, high rates of inflation, cost of borrowing, labor and office facilities would either directly or indirectly affect the cost of doing business. Since most of these factors are out of the control of the entrepreneur, it is critical that you put a close leash on your expenditure with the intention of weeding off expenses that do not directly increase your sales.
ENERGY PRICES
This will directly affect your traveling costs. If you have a habit of having meetings outside the office you may want to watch out for this cost. You may also want to take advantage of technology such as conference calls or skyping as an option to physical meetings. If the nature of your business is one for delivering products to the customer, it would be helpful to analyses the cost of purchasing a vehicle through hire purchase, leasing one and the cost of public transport. Select the option that is conducive to your business. When considering these options, one must be careful to include the full cost of the vehicle which includes maintenance insurance, fuel and possibly a driver.

HIGH RATES OF INFLATION
Increase in inflation will reduce your purchasing power making it difficult to purchase supplies needed to deliver your service. In addition to this, it is also important to remember that the rise in inflation will also reduce the level of disposable income for your customers hence reducing your sales volumes. You then have two options, to reduce your cost of production or differentiate your outputs to increase the value of your services. For extremely profitable ventures, it would be prudent to hold on dividend payouts and invest the surpluses in secure investments such as real estate, or fixed income securities.

COST OF BORROWING
Debt can be a good or dangerous for the business. The high cost of interest makes it expensive to acquire capital to either start a business or provide working capital. Short term borrowing tends to be more expensive and if not carefully monitored, you may end up working for the financial providers. It is critical that during a season of high interest rate to use debt to acquire assets that have a high rate of return and to structure it in a way that you are able to pass the cost of borrowing to a third party.

LABOR COSTS
The recent increase in minimum wage is a good indicator that the cost of labor is on the rise. You have to make a clear distinction between a profit center labor force and a cost center. Cost center labor forces are your administration, support staff and back office operations. They do not directly contribute to producing sales. Companies should consider outsourcing such services to reduce the wage bill, which included the cost of supervision and training. One must be strategic when recruiting. Staffing must be seen in the light of either increasing revenue or saving costs. A gap analysis will help you identify the critical skill needed to generate value that will get you out of a hole or propel you to greater heights.

OFFICE FACILITIES
A good office space will give you a sense of stability and comfort for you to execute your operations. Support services such as electricity, water, office refreshments, stationary and internet come with the territory. These are all expenses that are within your control. Business centers are a good way to save on facilities cost since these services are provides in bulk.

SAVINGS AND INVESTING
You must always be moving towards reducing your business risk and the best way in doing this is growing your passive income. This is income that is generated from your investments. Over dependency on one source of income could be detrimental in the long term in an environment where costs keep escalating. Investing in real estate, a second business that compliments the existing one are some examples of investment worth perusing. Investing in assets that are tax allowable would also be of great help in your attempts at reduce your tax liability.

The cost of doing business is predominately due to factors that are somewhat out of the control of the entrepreneur. As a result this increases the risk of doing and sustaining your business. You have to sharpen your skills and efforts in reducing this business risk through carefully making value adding decision for your business.

 

Profit Pathways – P.A.S.S.I.O.N Part 1

I recently had the opportunity to speak at an event and I share on what I titled 7 Pathways to Profit which I believe will be of value to you. Turning your Passion into Profit is a lifestyle.  It is not a destination because it keeps evolving as you keep discovering and making adjustments.  In the weeks to come I will share 7 pathways that will lead you to profit by your passion and it spells the acronym P.A.S.S.I.O.N. The pathway you follow will always determine your destination.

1. Before your Passion can bring you Profit, it has to be a solution to a problem. And how you provide the solution will determine your profit. Many people tell me I have but I have many passions, how can I know which is the one that will turn into profit.  And my response is always the same, which of the many passions you have is a solution to another’s problem.  Believe it or not, I love to sing and I can sing!  But I have noticed that no one has invited me to sing at any event, save at my nephew’s wedding where it was a dare.  But that is a story for another day. No one has ever asked me to sing.  However, I get many invitations to speak, which has led me to the conclusion that speaking is a better passion to turn into profit. The problem I solve is helping people create, manage or grow their enterprises.  Some people want to start and are afraid or don’t know where to start; others have started and need to scale up while others just need a one time solution for a persisting problem.  I am called to serve all those people through our programs Business Success Blueprint, Scale Up Blueprint or Speak for Profit for those who have a passion to speak like me. Before I move on to the next pathway, how you solve the problem will determine the kind of profit you attract.  Choose to be a peak performer and not a short cutter.  Be the best at solving the problem you are called to solve whether you are doing it pro bono or for a fee and watch the profit roll in.
2. For a long time I have heard it said that your Attitude will determine your Altitude. And to some extent I agree. But as I look around me, I have seen many people with a good attitude that have lowly incomes and people with good attitude and aptitude that were raking millions.  So I decided to alter that quote to “A good attitude with aptitude equals a cruising altitude” Did you know that private jets are designed to fly higher than commercial jets? And that the higher you fly the less congestion you experience? I hear the air is cleaner and the internet speeds are faster!  Similarly if you add aptitude, which is acquired capacity, to your passion, you can set yourself apart in your industry and enjoy less congestion and higher speeds of progress.  Acquiring capacity means reading regularly, investing in personal development of yourself and your team, refusing to settling for less than the best, developing some non-negotiables as a standard. Some of mine include, showing up on time every time, working with deadlines,  refusing to cut corners and going for excellence, to name a few.  The temptation is normally to fit in, I dare you to be your best self and stand out! Depart from the congested altitudes and soar to cruising altitudes.

 

How Much is More?

What a great weekend we had here at PassionProfit!  This past Saturday we converted our monthly talk to a FREE talk to enable more people participate and we had a great turnout.  Thank you for everyone who was able to make it.  If you were not able to make it you are in for a treat as this issue will have a brief recap of the same.

MAKE MORE MONEY IN 2014
Many people are uncomfortable around money, but the truth is we all need it as it is the standard medium of exchange in the world.  And the truth is the more we have the more good we can do anyway.

1. How much is More? Until you become aware of how much money you are making and how much you would like to make and why? You may remain stuck at your current situation.

2. The # 1 Roadblock to making more money is our conditioning.  Growing up we heard, observed and experienced specific incidents which have over the years conditioned us to think of money in certain way.  This also referred to as paradigm.  You need to become aware of your conditioning and create new paradigms of truth and not myth so that you can experience a new level of financial breakthrough.

3. How to Maximize your Financial Potential: People in business are not necessarily better than people who are working.  It is however essential to find out what is your purpose. Passion is the fire that ignites that purpose. It should be a solution to a group of people (target audience) and there should be enough of these people willing and able to pay to make it a business and not a hobby. Your performance will determine your renumeration.  Please note that  there are times you may be called on to perform for free, it is ok especially if the activity is for your target group.

And finally, what if you have many passions? How do you find your PassionProfit niche? Do a passion audit to determine which passion is suitable for a business or service based on the needs in your environment.

This is just a snippet of the 3 hour Free talk we had.  You can join us on April 5th, 2014 at All Saints Cathedral for the next one.  Topic: Is your Business Relevant in the 21st Century?

God desires you to prosper even as your soul prospers.  I wish you prosperity in every area of your life.

http://www.passiontoprofit.co