You need a map to guide you on the market
One important input to develop your business is to have a relevant view on where your profitable and unprofitable customers and products are.
For big important customers that are unprofitable, you need to take action to improve. The profit analysis gives you the answer to which these customers are,
what makes them unprofitable and indicates possible improvements. For example it might be that
- part of the production requires much resources
- order process is complicated
- product packaging need to be simplified
- you add more value to the customer so a higher price is accepted
Big customers, that are profitable are vital to keep and develop.
You may find new business to develop, small new customers with very good profitability. Can these customers expand? Are there other potential customers in this area?