If your profit margins aren't rising, chances are your company isn't thriving.

Here are five solutions to the problem....

I believe that your profit margin trend is the single most powerful indicator of your company's health. As margins decline, companies cut their sales and marketing efforts. Manufacturers postpone plant upgrades and delay research and development. And it becomes a lot less fun to own a business. Obviously, something needs to be done.

Here are five bold solutions to help increase your profit margin:

1. Fire Your Customers.

Getting rid of the 20% of your customers who provide the lowest profitability frees up capacity and resources to do work that is more profitable.

2. Go for Mailbox Money.

"Mailbox money" is what I call checks that show up even though you're not doing any extra work. To get mailbox money, license your intellectual property to another company. I know a small automotive parts maker in Alberta who licensed out his unique manufacturing technology to two companies, one in Europe and one in the U.S. Royalties from those deals have kept him in business even though orders from U.S. customers have declined.

3. Set yourself apart.

Focus your energy on products that are meaningfully unique. A business owner I met in the Nova Scotia used to manufacture more than a thousand different types of ceramic tiles and accessories. He voluntarily discontinued about 80% of his products, focusing his sales and development efforts on products that gave him a competitive edge. The result has been a rebirth of the company. He has doubled his profit margin and increased sales.

4. Export.

Look for opportunities beyond our borders. Take advantage of the freedom the North American Free Trade Agreement provides. Use your network of suppliers to find international opportunities. Visit industry trade shows in other countries to seek potential distribution partners. Avail your self of  'freebie' assistance programs offered by both Ontaio and Federal Governments.

5. Love Your Product Again.

Reinvent your products and industry. Unique products command higher prices and greater profits. This requires that the leader of the company—you—become genuinely passionate about discovering and developing new ideas, innovations, and inventions for customers.

I'm continually amazed at the passion and energy that some entrepreneurs have reinventing their businesses. In Ontario I met Tom Lee, co-owner of Lucky's Tomatoes, whose life mission is to grow and deliver better-tasting tomatoes to Toronto restaurants.  Out west I met Bonnie Swayze of  Union Rubber Co. Her family's mission—for 85 years—has been to find new uses for rubber bands. In Mississauga I met John Cronier, the owner of Crown Industries, which makes bakeware and pizza pans. He captivated a dinner party I attended with his passionate explanation of how the pan improves pizza quality. It wasn't the business that was captivating—it was his enthusiasm. Could you do the same talking about your business?

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).

E-mail: buspilot@bell.net