About this episode

Sales can feel exciting, but sales alone do not keep a business healthy. Profit is what remains after costs, time, effort and resources are taken into account. If we want a stronger business, we need to understand what makes profit and what quietly drains it away.

In this episode, we share seven tips to increase your profits. We look at profit mindset, why profit matters more than sales value, how to understand and manage costs, how to identify profitable products and customers, why digital accounting systems help, and why cash flow planning supports profit improvement.

What you’ll learn in this episode

• Why a positive relationship with profit matters.
• Why profit is more important than sales value alone.
• How to understand what your business costs.
• Why managing costs improves profit.
• How to identify which products, services and customers make profit.
• Why digital accounting systems give better financial insight.
• How planning cash flow supports better profit decisions.

Why profit matters more than sales

The first step is to have a positive relationship with profit. For some business owners, profit can feel uncomfortable or even vulgar. However, profit is not something to apologise for. Profit helps the business survive, grow, reward people fairly, invest, and make a bigger impact.

Profit is not the same as sales. Sales show the value of what we sell. Profit shows what is left after the cost of delivering those sales has been taken into account.

That is why a high-value sale is not always the best sale. A smaller sale with lower cost, less time and better margin may generate more profit than a larger sale that absorbs too much energy. For a deeper foundation, our episode on What Is Profit? Gross Profit and Net Profit Explained is a useful starting point.

Tip 1: Build a positive profit mindset

Profit should be one of the main goals in business. We may want control, independence, impact, flexibility, or the ability to help more people. However, without profit, those goals become harder to sustain.

A positive profit mindset means seeing profit as a business friend. It helps us keep the lights on, support our team, serve customers, improve systems, and build a business that lasts.

When profit becomes part of our focus, we stop treating numbers as an afterthought. We start using them as a guide.

Tip 2: Focus on profit, not just sales value

It is easy to be impressed by the biggest sale. However, the biggest sale is not always the most profitable one.

We need to look at the time, cost, effort and resources needed to deliver each product or service. A £1,000 sale may look better than a £100 sale, but if the larger sale takes far more time and cost to deliver, the smaller sale may create better profit.

Profit should guide what we promote, price, sell, and improve. Sales matter, but profit tells us whether those sales are actually working for the business.

Tip 3: Know your costs

We cannot improve profit if we do not know what things cost. That includes direct product costs, staff time, freelancers, marketing, software, website costs, delivery costs, production costs, overheads, and everything else needed to run the business.

Knowing costs helps us understand whether prices are realistic, whether customers are profitable, and whether certain products or services are worth continuing.

A business that does not know its costs is guessing. A business that understands its costs can make better decisions.

Tip 4: Manage your costs

Knowing costs is only the beginning. We also need to manage them.

Cost management means reviewing what we spend, checking whether we are getting value, comparing suppliers where sensible, and asking whether certain costs still support the business. It does not mean cutting everything. It means spending with purpose.

For example, marketing costs may be essential, but we still need to know whether they support profitable work. Staff and freelancer costs may be necessary, but we still need to understand how they affect margins.

Tip 5: Understand what makes profit

Most businesses sell more than one product or service, and not all of them make the same level of profit. Some customers may also be more profitable than others.

We need to understand which products, services and customers contribute most to profit. A supermarket does not treat every product in the same way, because different products attract different customers, margins and buying behaviour. The same thinking applies to smaller businesses.

This is where a deeper profitability review helps. Our episode on Conducting a Profitability Analysis explains how to look more closely at where profit is really coming from.

Tip 6: Get closer to your numbers with digital systems

Up-to-date numbers help us make better choices. If we rely on old information, paper records, or spreadsheets that are not connected to the business, we may miss what is happening now.

A digital accounting system can help capture sales, costs, receipts, invoices and bank information more quickly. It gives us a clearer view of what we are selling, what we are spending, and what profit may be available.

The point is not technology for its own sake. The point is better visibility, less wasted time, and more reliable information for decision-making.

Tip 7: Build a cash flow plan

Profit and cash are connected, but they are not the same. A business may make profit on paper but still run into cash pressure if money comes in too slowly or costs need paying too quickly.

That is why profit improvement should be supported by a cash flow plan. We need to know whether the business can afford growth, investment, marketing, stock, staff, systems, and future commitments.

A cash flow plan helps us see what may happen before it happens. It gives us time to adjust prices, costs, sales activity, payment terms and spending decisions.

Practical profit improvement steps

• Review your relationship with profit and treat it as a business priority.
• Compare products and services by profit, not sales value alone.
• List the costs needed to deliver each product or service.
• Review overheads, subscriptions, suppliers and staff time.
• Identify which customers and products generate the best profit.
• Use a digital accounting system to keep numbers up to date.
• Prepare a cash flow plan before making major growth decisions.
• Use your numbers regularly, not only when tax or accounts are due.

Related episodes

• What Is Profit? Gross Profit and Net Profit Explained
• Increasing your profits - Four Effective Steps
• Conducting a Profitability Analysis

Key takeaway

Profit does not improve by accident. We need to understand what profit means, where it comes from, what costs support it, and what decisions may reduce it.

The seven tips in this episode give us a practical starting point: build a better profit mindset, focus on profit over sales, know and manage costs, understand profitable products and customers, use digital systems, and support decisions with cash flow planning.

If profit, costs, or cash flow feel unclear, visit ihatenumbers.co.uk or listen to the related episodes above to build more confidence with your numbers.

Plan it, Do it, Profit.

“Sales can look impressive, but profit tells us whether the business is really working.”

Share this episode: Listen on Apple Podcasts

🎧 Enjoyed this episode? Subscribe and leave a review on Apple Podcasts — it helps more business owners understand profit, finance, and their numbers.

Episode Timecodes

• 00:00 – Seven tips to increase profits in your business
• 00:59 – Why a positive relationship with profit matters
• 01:15 – Profit is not the same as sales value
• 01:58 – Why profit should be the focus
• 03:20 – Knowing your business costs
• 04:13 – Managing and reducing costs sensibly
• 04:41 – Understanding what makes profit
• 06:42 – Getting closer to your numbers
• 07:04 – Using digital accounting systems
• 08:52 – Building a cash flow plan

About the Podcast

The I Hate Numbers podcast helps business owners understand accounting, tax, finance, profit, cash flow, and business planning in a practical way. We simplify financial topics so you can make better decisions and feel more confident with your numbers.

You can also watch more practical finance and tax support on the I Hate Numbers YouTube channel, or listen and follow on Apple Podcasts.

Further Support

📘 Book

https://www.ihatenumbers.co.uk/i-hate-numbers-book/

🎧 Podcast

https://www.ihatenumbers.co.uk/i-hate-numbers-podcast/

🌐 Website

https://www.ihatenumbers.co.uk

I'm going to share with you seven tips to increase the profits in your business. Hi folks. Welcome to another weekly episode of I Hate Numbers. The show's mission is to make your business more profit, save tax, save time, give you the business lifestyle that you want, and up your money mindset. In this podcast episode, I'm going to share with you seven ways, seven tips, tactics,

call them what you wish to increase the profits in your business. Let's crack on with the broadcast.

You are listening to the I Hate Numbers podcast with Mahmood Reza. The I Hate Numbers Podcast mission is to help your business survive and thrive by you better understanding and connecting with your numbers. Number love and care is what it's about. Tune in every week. Now, here's your host, Mahmood Reza.

Now, the first thing is absolutely critical to do, it’s to have a good positive relationship with profit itself. Now, for some people, making profit is a bit of a vulgar thing. It's a thing they dissociate themselves, so you need to get that embedded in your focal point.

Now, profit is not the same as the value of the sale. Profit is effectively the value of what you sell, less the cost of doing that. Pure and simple. Not too many people focus on the value of the sale they're making. Not enough on profit. But let's remind ourselves why profit is such a big deal, why it's your friend in business, why it's really important and critical that you have that as one of your primary goals.

You are in business to deliver your why. It may be more control over your own life. It may be to help more people. It may be to be financially independent. It may be to make more money. It could be all those things and more. If you do not make profit in your business, then your business will not survive.

So, have a positive relationship with profit as much as you do with numbers in your business. Number two, profit is the focus of what you're doing, not the value of the sales,and you might be at home thinking that sounds a bit odd. What do you mean, Mahmood? Let me explain. If I’ve got two products that I'm selling, one is selling for a hundred dollars,

one is selling for a thousand dollars. Instinctively our brains will be thinking, oh, it's the thousand dollars item, that's what I'm going to focus on selling. However, that's not really what I should be looking at. I should be looking at what does it take in terms of time, in cost to deliver and sell those two items.

So, if there's minimal cost involved, minimal time involved in selling the hundred-dollar item, but actually, a lot more cost and time involved in the thousand-dollar item, it may be your thousand-dollar item doesn't generate as much profit, if any. And what you should be looking at is the value of the profit that you are generating, not the value of the sale.

That is often said, and I've said it before on previous podcasts, is sales are vanity, profit is reality. The third thing we've got to bear in mind, so we've talked about mindset, we talked about profit being embedded as a focal point, it triumphs over the value of the sale every single time, is about actually knowing what your costs are.

So, could you tell me what you're spending, what products are costing you, where your money goes? If you can answer yes, and you can answer it now, and it's up to date, fantastic. If you don't, you need to get more associated with what things cost you. Now, it's the cost of running your business, so, typical things like your website spacing, your marketing costs, the cost of any VAs, freelancers, the cost of your staff time, the cost of making the product, all those things you've got to have a connection with, and you actually need to understand what they actually are.

What that means is, folks, is that you need to make sure you've got a good system in place for making sure you achieve that. I'll put some links in the show notes at the end to give you some reference points, but the upshot is you need to go digital. If you're relying on sheets of paper, spreadsheets to actually do that for you, then you're missing a trick,

and you are wasting your time. You need to plug yourself in. The fourth thing you need to do is to manage those costs, so it's not only understanding what they are, you need to manage them. And by managing them, that means is you need to look at them. Are you overspending? Are you underspending? Are you benchmarking those against different supplier prices and see what you're getting? And where you can, you are needing to manage and reducing the cost of supporting and running your business.

So, typical things like your staff time, your freelancers, your marketing costs, and are you getting the best value from those items? If not, manage them and move your cost to make them more efficient. The fifth thing that we need to consider is that to understand what makes the profit. Now, all of us in business will have a variety of products that we're doing.

We'll have a variety of customers that we sell to, and what we need to do is to understand what is actually making that profit. Now, if I think about a supermarket that might be selling a variety of products, it'll be selling everything from the dairy products, the bread and the milk. It'll be selling electrical items. It'll be selling meat products.

It'll be selling a whole basket of these things. Those things do not all generate the same level of profit for the supermarket. That supermarket is going to design its shop window, so to speak, to entice customers to buy some of what you might consider lower-ticket items - the lower value products, which may not necessarily make them a large amount of profit, but it trip-wires them into buying large items.

It may be, those smaller items actually generate more value. So, you need to understand in your business, not in global aggregate terms, what are the products that you are selling, what are the services you are providing, and how much profit are you making from those? Now, notice I'm emphasising the word profit.

Profit may not necessarily be something you can achieve straight away. It may not be the maximum level that you want to do. If I think about my own business over the last 26 years, I provide a variety of services from simple tax planning to account’s production, management systems, a whole wide variety of things that are involved in the numbers world.

Do I make the same level of profit on each one? Absolutely not. Am I making the maximum level of profit that I can? Absolutely not. Am I aspiring to focus on making more profits in my business? Absolutely. If I can do that, I can obviously make sure my staff are well rewarded. I can invest. I can help more clients.

I can avoid a full-time, proper job, and I can actually have the business and the independence that I went into for the first place. Now, number six, we talked and referenced earlier on about knowing your costs. It's all very well talking theoretically, what we've got to do in our business to improve profitability, but we need to make sure we are close to our numbers.

We become friendlier with our numbers. I love numbers. I think they're a powerful tool in business. They're your best friend in business. They won't lie to you. They tell you what's going on. They're there for you in good times and bad. And you need to get a closer association with your numbers. And the easiest way to do that is by plugging in to a digital system, or you might call it a cloud system, but a digital accounting system.

And what that means is every time you are spending money, you can actually get your digital system to catch that information. You can actually figure out what you are selling and you've got that information in real time up to date now. There's no point relying on information that's several weeks, several months out of date because they will not give you any insight or any steering your business.

So, go digital. Prices range from the price of a cup of coffee a week to probably a gin and tonic. But again, you will save time and energy and it's an absolute must. So, let's round-up where we are, folks, so far. We talked about mindset. We talked about focusing on profit and having profit as your guide, not the value of the sale.

You need to understand and know what your costs are in business. And if you don't know what your costs are, make a note. Get a sheet of paper, scribble down what you need to spend money on, to deliver to your customers, to run your business. What you need to do to attract customers, and make a list of them.

And then put the numbers by them. Managing your costs as well as knowing what your costs is really key. Understanding what is it that contributes to the profit in your business. So, what customers make you profit? What products make you profit? Plug into a digital cloud system. The price point of these nowadays is absolutely ridiculously low compared to what you are getting out of them, and you've got the power of your mobile phone.

It's a real no-brainer as far as I'm concerned. The last thing I would suggest that you do, folks, is to put yourself together a plan, and by plan, I mean a cash flow. Now, by this I mean this follows. Now, when you come to making profit, it may be one of those things, as typical in all businesses, you spend money now to generate profit in the future.

So, you need to make sure underpinning all this, that you can afford to develop the business as you wish it to. So, invest in a plan. Check out the show notes at the end, and we'll get a lovely little treat coming up for you in the end of May on a cash rope thing, but that's a story for another day. So, hopefully you've got some good value out of this podcast.

I'd love it if you could share with your friends. Any feedback, comment is really welcome. Phone to that, folks. Have a fantastic week. Subscribe to the podcast and I'll catch you on the other side.