Profit is vital to every business, what is the point of being in business if you don’t make a profit?
So here are my tips on how to improve your profitability:
- Weed out loss making products, clients and departments – concentrate on high margin products and services
- Reduce Employment Costs – use Freelancers instead of Permanent Employees where appropriate
- Use Virtual Communication Technology – meetings can be held over the internet with Skype or other systems, it will cut traveling time and costs
- Use Social Media and Networking – marketing can be costly and the results can be hard to measure, use your contacts to generate leads and sales and always ask for referrals
- Increase Productivity – eliminate wasteful and unnecessary processes, I was told it used to take 17 people in the NHS to change a light bulb on a hospital ward (requisitions, approvals, payments, changing the bulb…) the solution to cut wasted processes was to keep a stock of bulbs on the ward
- Negotiate with suppliers – always look at ways to reduce cost including using alternative suppliers
- Understand your clients requirements – the client knows what he wants and what represents value, if you deliver value you will get more business
- Seek add on sales – what other products or services might be useful to your existing clients
- Keep an eye on your competitors – competitor analysis will enable you to understand differences in price, distribution, market and demand
- Find New Markets – use market research to expand into new areas
- Decrease Overheads – analyse all of your overheads including Rent, Rates, Utilities – could you sub-let part or your premises or reduce waste
- Reduce Stock Levels – can you turnover your stock more quickly or buy to order
- Improve your Cash Cycle – reduce slow payment by debtors, invoice promptly and settle disputes quickly
- Invest in Technology – automate processes with ERP systems
- Use Key Performance Indicators – KPI’s help you achieve your goals
steve@bicknells.net
