This article is featured in Dakota Design Company’s Year End Playbook
1. UNDERSTAND YOUR FINANCIAL POSITION
Before looking at 2025 profitability, it’s important to understand your company’s
current financial position. A good indicator of the future is the past, and financial
reports like the Balance Sheet, Income Statement, and Cash Flow Statement,
illustrate just that. They provide valuable information about the company’s
profitability, financial stability, and growth potential to help with key decisions
moving forward.
Financial reports are a great foundation for building a company plan. You can use
them to create a budget with your profitability goals in mind. A budget indicates the
revenue you expect to come in oIset by your expected expenses, resulting in
monthly profit. By looking ahead, you can identify the months that may be less
profitable giving you time to make informed decisions and necessary adjustments. If
you wait to simply react, then it’s likely too late. Understanding where you are now
and where you need to be, will help you make 2025 your most profitable year yet.
2. LEARN FROM YOUR PAST PERFORMANCE
With every business, it’s important to know who your ideal client is. Ideal clients are
generally quick decision makers, place high value on your services, and result in
high profitability. One of the keys to attracting your ideal client is to know your ideal
profit.
Looking at your past performance allows you to improve your future performance. A
good way to identify a desirable project (and price it correctly) is to look back at your
past projects. Project profitability reports help you determine your ideal profit. They
identify the projects’ true cost of reselections, going over budget, not billing back
other charges, and taking too long, which should be minimized or avoided on future
projects. They also help you identify whether the markup or the supplier discounts
were sufficient to sustain the project and make a strong profit.
Past project profitability reports help you to make informed decisions on future
projects. They allow you to attract your ideal clients, better price your projects,
streamline your processes, and identify ways for you to add more value, which
should ultimately lead to your most profitable year yet.
3. SEEK TO IMPROVE
One of the keys to a company’s profitability is to strive for continuous performance.
If you’re not seeking to improve, you are likely falling behind and eventually the
company may become stagnant. A business’ longevity is built from a strong
foundation with long-term strategies and sustainable practices in place.
The following are examples of such practices and strategies for a profitable 2025:
• Implement systematic processes and improvements
• Create efficiencies through automation and streamlined processes
• Identify and eliminate waste and nonessential processes
• Identify and mitigate risk
• Leverage technology
• Keep high-performing team members (low turnover)
• Implement cost eIective strategies and leverage supplier relationships
• Put a plan into action to handle & minimize disruptions (i.e. employee
turnover)
• Partner with professionals in other areas of expertise