“How do you propose to increase your income?” Ask any small business owner, you will receive thousand and one different answers on their plans or strategies to increase their income. And if you continue to ask, “Why do you think all these plans and strategies of your will increase your income?” You will receive another one thousand and one different answers on how they are sure their plans and strategies will works.

It is not surprising and uncommon to see when a small business owner runs a sales campaign which increases their sales revenues; they often do not generate enough profit to sustain the downturn after the sales campaign. While the plans and strategies work well to increase their income, their expenses and cost also escalated.

Many small business owners whenever they run a sales campaign to generate sales, they often focus on the transactions rather than the customers whom they dealt with. They are so engrossed in concluding the sales and make the profit and forgotten about the source of the income.  As a small business owner, you must always remember that a dollar earned from sales will not give you a dollar in profit, whereas a dollar saved from expenses will immediately add a dollar to your profit. While this is not to say that small business or any other business should not spend to generate more income,  you must always know where the money goes to and how much income your generated from that dollar spend to conclude the transaction that bring in the sales or income.

Always bear this in mind, the source of any income for your come from your customers, without customers, there will be no business for you, period. So your focus should be on your customers and not the transaction. For the long tern benefits if your business, there are two factors that you must monitor;

1. The acquisition cost of your customer; this is the amount of money you spend to bring in that customer. Simply put, say if you run a newspaper advertisement which cost you one thousand dollars and bring in twenty new customers, your acquisition cost per customer will be fifty dollars.
2. The value that one customer will continue to bring to your business after the initial transaction. Assuming that that one customers will continue buying from your for the next couple of years; the life time value of the customer.

If you are not aware of the two factors, you may continue to run your sales campaign to generate sales but realized that at the end of the day, your expenses had eaten up all your profits.

SK Wong, A Chartered Marketer of The Chartered Institute of Marketing UK; graduated with an MBA in Finance. He is also a Certified NLP Sales Trainer and a Certified Member Trainer of Junior Chamber International. Currently SK is working as Manager in a Risk Management & Insurance company. He is in charge of Business Development, Operation and Management of his unit. SK has conducted many training for his teams of Financial and Insurance Consultants on Motivation, Goal setting, Leadership Development, Marketing & Sales and Management Effectiveness apart from product knowledge training.

His website/blogs Profit strategy and Resources provide tips and strategy for small business success, online or offline. His blog Inspire Success Action provides insights, ideas, strategies and tools for personal motivation and success!

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