Football fans will probably recognize the saying “offense sells tickets; defense wins championships.” In the game of finance, offense is the ability to make more money while defense is all about how money is managed. So the question is, in the game of finance, does offense or defense matter more? Turns out that to win football championships, as well as finance, you need to be good at both offense and defense. Much like football, if you want to increase the money your business makes, as well as learn how to keep it, you have to know the rules, have a strategy and play both offense and defense to win your financial game.
FINANCIAL OFFENSE
Financial offense is a business’ ability to increase the money they make. This can happen by raising prices or adding a new product. Below are 5 ways businesses can play financial offense:
1. Increase Pricing: The easiest way for most small companies to increase their income is to increase pricing, especially for those who have been in business for awhile. Many small businesses set prices low when they first launch and have only made nominal increases to pricing every few years. Now is the time to sit down and rethink your pricing model. If you bill hourly, review your rates and push them higher. If you charge per product, look for ways you can command a higher price.
2. Increase the dollar value of every purchase transaction: Think up-sell, cross-sell, and resell. Ask yourself how you can get each customer transaction to be for a larger dollar amount. Look for ways to bundle products and/or services so that you increase the average dollar value of every sale.
3. Increase your product or service sizes: Think about this as selling a bigger box of a product or service that you already offer. If you sell a 10-hour package of time, add options for a 20- or 50-hour deal.
4. Focus on the best: Use your best efforts, talent, and attention to sell your best, or most profitable, products and/or services. Hone in on your best and repeat customers, understand your best product, and utilize your best channels.
5. Make it simple: Buying from you should be easy and simple. Eliminate frustrations and reduce barriers to entry as well as any hurdles to re-purchase.
FINANCIAL DEFENSE
While financial offense was a business’ ability to make more money, financial defense is all about how a business can spend less money. Companies can utilize money saving tips like outsourcing work and having a strategic tax plan. Below are 5 ways businesses can play financial defense:
1. Outsource work: It’s true that employees are essential to getting work done, but employee costs can be the biggest chunk of a small business’s budget. To save money, consider keeping full-time staff to a minimum and outsourcing work to independent contractors as needed. Your business could even benefit from the more varied experience of contractors.
2. Eliminate items that don’t add value: Tasks and activities that don’t add value to either the company or to the customer should be eliminated. These cuts will benefit both your customer and your bottom line.
3. Lower your fixed overhead: Have a clear understanding of your base expenses and look for ways to eliminate non-strategic expenses. Consider allowing employees to telecommute to save money. Make informed decisions about your inventory by knowing the costs of your capital, storage, and insurance.
4. Shorten your sales cycle: Look for ways to close the sale faster. A shorter sales cycle decreases your cost per transaction and frees up your sales staff to work on other tasks or additional sales.
5. Have a Strategic Tax Plan: Planning is the key to successfully and legally reducing your tax liability. A Strategic Tax Plan is a true “business fundamental,” and a quick and free assessment is all it takes to get started. Our comprehensive and proven Strategic Tax Plan could save you tens-to-hundreds of thousands in taxes every year.
By combining financial offense with financial defense, your business will be running full speed toward your financial end zone. We are here to help you put together a winning game plan. Most business owners are wasting thousands of dollars a year in taxes because they didn’t know better and didn’t have the right coach in their corner. We understand that while knowing the Tax Law is good, using the Tax Law is best. See how the Tax Cuts and Jobs Act of 2017 provides more opportunities to cut your bill. Find out how to get your free copy of the book What Intelligent Business Owners Know today!