The Wrong Numbers

Like any business owner, you are probably very aware of your turnover.

After all, it’s a crucial metric to be aware of as it indicates how well your business team is doing its job of selling your services or products.

The higher the turnover, the better you may think the business is doing but that is a dangerous assumption to make, as we’ll see later.

High Or Low ?

Low Turnover

Low turnover is a good indicator that it’s time for a review, obstacles found, and improvements made. Just a few examples for low turnover could be:

  • The market you’re in may be already saturated or demand for your products or services may be declining. This comes down to your market research and understanding the value propositions they are looking for.

  • You could have ineffective marketing strategies that are not finding the right audience you are looking for. If you haven’t clearly defined the type of companies you want to work with, often you tend to work with anyone, whether suitable or not.

  • Low customer service could be another factor, resulting in your existing customers are not buying more from you or even leaving and going to your competitors.

High Turnover

Having a high turnover doesn’t always mean the garden is rosy either. It can create a comfort zone that doesn’t feel the need to review the business and that can be equally dangerous.

  • It can mask issues like having a very leaky sales process, where you are pulling in a great number of leads, only to find that a good number are being lost in the sales process.

  • It can hide inefficient sales and customer retention processes which could lead to a dramatic change in fortunes in the near future when all the leads start to dry up.

Does Higher Turnover Just Lead To Higher Costs ?

What a high turnover doesn’t necessarily mean is that your company is profitable. Julia spoke about this on her recent podcast ‘T is for Turnover’

In the battle to increase turnover, you might be incurring higher costs in your marketing and staff budgets. You might be purchasing new software for your business in the quest for better efficiency, when in fact the systems and processes you did have were up to the job, except that you may not have been getting the best from them.

Turner Rising Profits Static ?

You may find that, as your turnover increases, your profits are at best, static or at worst, beginning to fall. As you work to increase your turnover, it is very difficult not to incur extra costs but the aim is to not to increase them at the same rate.

  • To stop this slide, you need to find ways of increasing both. As a simple example, what you don’t want is:

  • Increased Turnover 50%

  • Increased Costs 60%

  • Profits -10%

You want to redesign that formula to be:

  • Increased Turnover 50%

  • Increased Costs 40%

  • Profits +10%

How Do I Increase My Turnover And Profits ?

There are cost free ways you can increase your turnover and your profits:

  • Correct Pricing Structure
    This could be raising your existing prices or creating a premium service at a higher cost.

  • Right Customers
    You could deploy your existing marketing into a different place, looking for a different calibre of customers.

  • Efficient Systems

    You may have some systems or processes that can be improved without incurring any extra cost.

Putting these elements right could get you to the formula of:

  • Increased Turnover 50%

  • Increased Costs 20%

  • Profit +30%

Need Some Help Sorting You Turnover Out ?

Sometimes you need help to unravel the underlying issues that are clogging your business, and this is where we can help you, as we have so many other businesses. As Julia said, if your turnover or profit numbers are wrong, let us help you to put them right.

Click on the button below to get in touch.

Mark Tanner