As we have shared the first 3 key areas in growing your business from our previous blogs, we are now focusing on how we can improve our business profit.
The 4 key areas are:
- Increase your customers
- Find new markets – with existing products or services
- Develop new products or services – to open new markets
- Improve profit
Here’s the fourth area…
Ways on Improving Business Profit
1. Automate processes to save time
Check out the current processes you may change to save more time or money. Another way could be changing from manual systems to automatic ones to less time to focus more on important tasks.
2. Lower energy use
Check out each area of your business individually and come up with ways to decrease energy use. For example, if you’re a supplier and you hold your inventory in a warehouse that operates 24 hours a day, electricity may be a major expense. Can you check alternative sources?
3. Reduce operating waste
Identify how to manufacture more efficiently to lessen leftover materials, which will reduce your cost of goods sold. For example, if you manage and own a large department store, there could be ways to reduce total staff hours to lower costs.
4. Investigate ways to improve your output
Enhance your output to deliver your products or services faster. If you can add staff, upgrade to the latest equipment, or change software; try anything to speed up production.
5. Negotiate ways to improve your margin
It sounds obvious however whichever way you choose to increase prices it all goes directly to your bottom line. Think about the impact on demand if you have price-sensitive customers. Does your product/service have any leverage to negotiate a higher price?
6. Identify what overheads you can lower
Calculate all your expenses to see what can be lowered without affecting your business operation. Consider negotiating again with suppliers and reassess any subscription services or set pricing plans. Here is an article about a better business budget.
7. Build a process to collect money owed to you faster
Check on your debtors to establish which ones need extra motivation to pay you sooner. Try to think about changing your policy towards new debtors by tightening payment terms or adding a discount for fast payers. Make sure you have Digital Banking as an option.
Have a 30-minute meeting with one of our expert accountants and business advisors to brainstorm the above ideas and create a tailored Action Plan to help you unlock your innovative ideas – leading to more business profits for you and increasing the value of your business!