How To Address Your Products And Services
There are many organizations that will continue to produce unprofitable products and services for some time. The reason as to why this happens are valid reasons.There is a need for organizations to ensure that the decisions that are made are sound and reasonable, as well as factual.These decisions may not be very popular, but they have to be made. There is a need to make the decisions even if they are political landmines. To remain relevant to the market and in a profitable position, you need to periodically assess your products and services.
Get a particular starting point and assess your products and services.You will need to review how your products and services have been doing for sometime like a year. It will not be enough to look at a single year and it is better to look at a span of about three years. It is appropriate to find out how your product and service have been doing in that span of three years but check this product.
The status of your products and services needs to be considered in this endeavour.For instance, one of your products or services may be new in the market and may need to prove itself. You may also have a situation where some of the products are not independent but depend on others to sell. If you are not careful, you may have a situation where a certain product or service is actually an overhead cost to the business.
It is prudent to ensure that you carefully establish how each separate product and service interacts with the rest of your portfolio. There are very many cases where some products and services simply contribute to overhead costs. There are some basic steps that you can follow in this.
You will first need to open a spreadsheet and then consequently create columns for every product or service. The columns should represent each main product or service. The label of the first column will be sales. On the left hand side, all the expenses will be written downwards.This should be the expenses related in a direct manner to the production of the service or product and you can learn more. The next column will be labeled gross profit and you can read more. Here, you are free to record all the components that relate to the selling of the product.
All the expenses lines will have to be added and then subtracted from the sales lines.This will be very revealing since you will be able to know the products that are not very profitable. The process will be repeated for each of the past years under review but view here for more.
The products or services that are not making profit should be eliminated.