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. Even if the decisions are political landmines, they must be made. To remain relevant to the market and in a profitable position, you need to periodically assess your products and services.
Be sure to get a starting point and then assess your products and services. The past one year may be your concern as far as performance of your products and services is concerned.This may not be enough span and you can therefore go for the past three years. Establish how your products and services have been doing in that period of time.
This endeavour needs to take into consideration the status of your products and services.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 therefore needful to carefully consider how each 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. You can easily follow the following steps so as to achieve your goal.
You can effectively open a spreadsheet after which you will make some columns, a column for each product or service. The columns should represent each main product or service. Sales will be the label for the first column. 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.All the component of selling and even marketing the products can be recorded here.
The expenses lines will 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.
AT this stage, eliminate the products or services that are not making much profit and you can click for more.