It is weirdly unfortunate that there are many organizations that produce unprofitable services as well as unprofitable products.The reasons behind this behaviour are to a large extent valid, but you can read more. You cannot overemphasize the need for sound business decisions.These decisions may not be very popular, but they have to be made.Actually, the decisions may be political landmines but they need to be made. You will, therefore, need to periodically assess your products and services, but you can check it out.
Get a particular starting point and assess your products and services. The past one year may be your concern as far as performance of your products and services is concerned. It will not be enough to look at a single year and it is better to look at a span of about three years.For the three years in question, establish how well your product and service has been doing.
This endeavour needs to take into consideration the status of your products and services. One of your products and services may have entered the market not very long ago, and this must be considered but consider this product. You may also have a situation where some of the products are not independent but depend on others to sell.Consequently, consider each product or service independently and ensure that it is not an overhead cost to your business but check this page.
It is therefore needful to carefully consider how each product and service interacts with the rest of your portfolio.Cases of the product contributing to overhead costs are not rare. 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.These should be columns for your main services and products. Sales will be the label for the first column. All expenses will need to be written downwards in the left hand side. These expenses will be the ones directly related to the cost of sold goods. Gross profit will be the label for the next column.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.This process can now be repeated for each of the past years that you are reviewing.
After this, it is prudent to eliminate products or services that are not making profit.