{"id":1761,"date":"2011-02-02T04:43:47","date_gmt":"2011-02-02T04:43:47","guid":{"rendered":"http:\/\/www.shanecampbellcfo.com\/?p=54"},"modified":"2023-01-25T17:05:42","modified_gmt":"2023-01-25T17:05:42","slug":"tips-for-profit-growth","status":"publish","type":"post","link":"https:\/\/www.b2bcfo.com\/shane-campbell\/tips-for-profit-growth\/","title":{"rendered":"Tips for profit growth in Petaluma – Part I"},"content":{"rendered":"

You have likely heard many business consultants\u2019 advice on growing profits.\u00a0 Now you get to hear\u00a0it from a part-time CFO<\/a>, with the added bonus that mine actually works. Not because I am smarter than everyone else (that\u2019s beside the point ), but because I have over 30 years of professional experience and have seen what makes the difference. So get on with it Shane, Mr. part-time CFO<\/a> – what makes the difference?<\/p>\n

It is very simple actually. You work very hard in your business and you should end up keeping at least 10% of what you sell as profit. Who wants to work as hard as you do and keep less than 10%?<\/p>\n

Gross Profit<\/span><\/em><\/strong><\/span><\/p>\n

To accomplish a 10% level of net profitability, you need to target at least a 40% gross profit. Gross profit is the profit you get on sales after subtracting your direct cost of acquiring whatever it is that you sell. To get a 40% gross profit, you need to markup your products\/services at the rate of 2 times your cost. That pricing structure actually allows for a 50% margin, but after discounts, shrinkage, and theft (yuck), you should get to a 40% gross profit, once the dust settles.<\/p>\n

So you have 40% left at this point. Keeping 10% should be easy, right? Not so fast. You would be more successful than most businesses if you can actually retain a 10% bottom line in this scenario, believe it or not. The reason is due to profit erosion from selling, general and administrative expenses. Here is the math:<\/p>\n

Selling Expenses<\/span><\/strong><\/em><\/span><\/p>\n

Most businesses require anywhere from 10% to 20% of sales to be devoted to sales and marketing costs in order to efficiently and effectively maintain sales and sales growth. I have used 15% in this example. Sales and marketing expenses include commissioned sales people, advertising, marketing, brochures, branding, website, search engine optimization, etc. Can you spend less? Sure. Will you grow? I doubt it. You will probably start to lose market share to a competitor over time if you neglect this area.<\/p>\n

General and Administrative Expenses<\/span><\/span><\/em><\/strong><\/p>\n

Then there are general and administrative expenses aka \u201cblood sucking overhead.\u201d If you can consistently keep these costs at 10% of sales or less, you are a true champion and need to write books on the subject. Last, deduct for income taxes, which brings you down to a 10% net profit retention.<\/p>\n

Conclusion<\/span><\/em><\/strong><\/span><\/p>\n

Yes, my comments are overbroad and will not apply to every business and every set of circumstances. But in general, I stand by my theory that most successful businesses (defined as those that retain 10% or more of sales as profit) are those that can maintain a 40% gross profit margin.\u00a0 Lets look at a glaring example.\u00a0 In the smartphone industry in Q4 2010, Apple realized only a 4% marketshare but commanded\u00a043% of the total\u00a0profits in this sector.\u00a0 Isn’t that the success we all seek?\u00a0 Doing less busy work (unprofitable sales) and making more than\u00a0the competition.<\/p>\n

To maintain a 40% gross profit margin and thereby achieve the high 10% net profit retention described above, a company usually\u00a0must sell at higher prices than those charged by the competitors. How do\u00a0they get that done? I have a theory on that one too, as you might have guessed. Hint: how does Apple “gitter done?” I hope you can come back for that discussion in my next blog.<\/p>\n

\n","protected":false},"excerpt":{"rendered":"

“You work very hard in your business and you should end up keeping at least 10% of what you sell as profit. Who wants to work as hard as you do and keep less than 10%?”<\/p>\n","protected":false},"author":25,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","cybocfi_hide_featured_image":"","footnotes":""},"categories":[16],"tags":[23,26],"class_list":["post-1761","post","type-post","status-publish","format-standard","hentry","category-shanes-really-deep-insights","tag-business-development","tag-profit"],"acf":[],"yoast_head":"\nTips for profit growth in Petaluma - Part I | CFO Services | B2B CFO<\/title>\n<meta name=\"description\" content=\"You work very hard in your business and you should end up keeping at least 10% of what you sell as profit.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.b2bcfo.com\/shane-campbell\/tips-for-profit-growth\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tips for profit growth in Petaluma - Part I | CFO Services | B2B CFO\" \/>\n<meta property=\"og:description\" content=\"You work very hard in your business and you should end up keeping at least 10% of what you sell as profit.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.b2bcfo.com\/shane-campbell\/tips-for-profit-growth\/\" \/>\n<meta property=\"og:site_name\" content=\"Shane Campbell\" \/>\n<meta property=\"article:published_time\" content=\"2011-02-02T04:43:47+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-01-25T17:05:42+00:00\" \/>\n<meta name=\"author\" content=\"Shane Campbell\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Shane Campbell\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/tips-for-profit-growth\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/tips-for-profit-growth\\\/\"},\"author\":{\"name\":\"Shane Campbell\",\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/#\\\/schema\\\/person\\\/8ee8bc641094acda4505098bb405e653\"},\"headline\":\"Tips for profit growth in Petaluma – Part I\",\"datePublished\":\"2011-02-02T04:43:47+00:00\",\"dateModified\":\"2023-01-25T17:05:42+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/tips-for-profit-growth\\\/\"},\"wordCount\":558,\"keywords\":[\"business development\",\"profit\"],\"articleSection\":[\"Shane's really deep insights\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/tips-for-profit-growth\\\/\",\"url\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/tips-for-profit-growth\\\/\",\"name\":\"Tips for profit growth in Petaluma - Part I | CFO Services | B2B CFO\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/#website\"},\"datePublished\":\"2011-02-02T04:43:47+00:00\",\"dateModified\":\"2023-01-25T17:05:42+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/#\\\/schema\\\/person\\\/8ee8bc641094acda4505098bb405e653\"},\"description\":\"You work very hard in your business and you should end up keeping at least 10% of what you sell as profit.\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/tips-for-profit-growth\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/tips-for-profit-growth\\\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/tips-for-profit-growth\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Tips for profit growth in Petaluma – Part I\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/#website\",\"url\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/\",\"name\":\"Shane Campbell\",\"description\":\"B2B CFO\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/#\\\/schema\\\/person\\\/8ee8bc641094acda4505098bb405e653\",\"name\":\"Shane Campbell\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/7b33240f4309c5ea4f19065cde4d6a6adf1148ddc452f54b5da81b4eb197ed96?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/7b33240f4309c5ea4f19065cde4d6a6adf1148ddc452f54b5da81b4eb197ed96?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/7b33240f4309c5ea4f19065cde4d6a6adf1148ddc452f54b5da81b4eb197ed96?s=96&d=mm&r=g\",\"caption\":\"Shane Campbell\"},\"url\":\"https:\\\/\\\/www.b2bcfo.com\\\/shane-campbell\\\/author\\\/shane\\\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Tips for profit growth in Petaluma - Part I | CFO Services | B2B CFO","description":"You work very hard in your business and you should end up keeping at least 10% of what you sell as profit.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.b2bcfo.com\/shane-campbell\/tips-for-profit-growth\/","og_locale":"en_US","og_type":"article","og_title":"Tips for profit growth in Petaluma - Part I | CFO Services | B2B CFO","og_description":"You work very hard in your business and you should end up keeping at least 10% of what you sell as profit.","og_url":"https:\/\/www.b2bcfo.com\/shane-campbell\/tips-for-profit-growth\/","og_site_name":"Shane Campbell","article_published_time":"2011-02-02T04:43:47+00:00","article_modified_time":"2023-01-25T17:05:42+00:00","author":"Shane Campbell","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Shane Campbell","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/tips-for-profit-growth\/#article","isPartOf":{"@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/tips-for-profit-growth\/"},"author":{"name":"Shane Campbell","@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/#\/schema\/person\/8ee8bc641094acda4505098bb405e653"},"headline":"Tips for profit growth in Petaluma – Part I","datePublished":"2011-02-02T04:43:47+00:00","dateModified":"2023-01-25T17:05:42+00:00","mainEntityOfPage":{"@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/tips-for-profit-growth\/"},"wordCount":558,"keywords":["business development","profit"],"articleSection":["Shane's really deep insights"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/tips-for-profit-growth\/","url":"https:\/\/www.b2bcfo.com\/shane-campbell\/tips-for-profit-growth\/","name":"Tips for profit growth in Petaluma - Part I | CFO Services | B2B CFO","isPartOf":{"@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/#website"},"datePublished":"2011-02-02T04:43:47+00:00","dateModified":"2023-01-25T17:05:42+00:00","author":{"@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/#\/schema\/person\/8ee8bc641094acda4505098bb405e653"},"description":"You work very hard in your business and you should end up keeping at least 10% of what you sell as profit.","breadcrumb":{"@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/tips-for-profit-growth\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.b2bcfo.com\/shane-campbell\/tips-for-profit-growth\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/tips-for-profit-growth\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.b2bcfo.com\/shane-campbell\/"},{"@type":"ListItem","position":2,"name":"Tips for profit growth in Petaluma – Part I"}]},{"@type":"WebSite","@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/#website","url":"https:\/\/www.b2bcfo.com\/shane-campbell\/","name":"Shane Campbell","description":"B2B CFO","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.b2bcfo.com\/shane-campbell\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.b2bcfo.com\/shane-campbell\/#\/schema\/person\/8ee8bc641094acda4505098bb405e653","name":"Shane Campbell","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/7b33240f4309c5ea4f19065cde4d6a6adf1148ddc452f54b5da81b4eb197ed96?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/7b33240f4309c5ea4f19065cde4d6a6adf1148ddc452f54b5da81b4eb197ed96?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/7b33240f4309c5ea4f19065cde4d6a6adf1148ddc452f54b5da81b4eb197ed96?s=96&d=mm&r=g","caption":"Shane Campbell"},"url":"https:\/\/www.b2bcfo.com\/shane-campbell\/author\/shane\/"}]}},"_links":{"self":[{"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/posts\/1761","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/users\/25"}],"replies":[{"embeddable":true,"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/comments?post=1761"}],"version-history":[{"count":1,"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/posts\/1761\/revisions"}],"predecessor-version":[{"id":12206,"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/posts\/1761\/revisions\/12206"}],"wp:attachment":[{"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/media?parent=1761"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/categories?post=1761"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.b2bcfo.com\/shane-campbell\/wp-json\/wp\/v2\/tags?post=1761"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}