In the book Islands of Profit in a Sea of Red Ink: Why 40% of Your Business Is Unprofitable and How to Fix It, the author makes a very thought-provoking statement. He says:
“Nearly 40 percent of every company is unprofitable by any measure, and 20 to 30 percent is so profitable that it is providing all the reported earnings and cross-subsidizing the losses. The rest of the company is only marginal.”
Do you think the author’s statement is true in your business?
What part of your business is the most profitable?
What part of your business is losing the most money?
In almost every business there are products, services, or people that are draining profitability and cash flow. They tend to go unnoticed if your overall company profitability is good.
You might be surprised what you find if you shine a little light on each part of your business.
You may discover areas that are losing money and need your attention.
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