How To Increase Small Business Profits
Increasing the profitability of your company can be achieved in a couple of ways, whether it’s by building your sales or reducing running costs. Profit is the ultimate goal of all businesses and should be carefully monitored. If your turnover and profit has increased, it’s easy to forget about analysing it, but your costs could have also increased, which may cause problems if not carefully managed.
Reducing running costs of the company
Consider renegotiating the suppliers you use. Regular negotiation with current suppliers will ensure that you always have the most cost effective deal available. Look at all the overheads of the business and make cuts where possible. Review the systems in the firm to make sure that there is minimal wastage, and remember that a good security system, though an initial outlay, will prevent theft from the company.
Establish Key Performance Indicators (KPIs)
KPIs are crucial for a company, as you can measure actual sales against actual costs, budgets, forecasts and profit margins. To make sure that you are implementing the correct KPIs, ask your management accountants to monitor them. Launch a reward scheme to incentivise all staff to increase productivity and invest in the business.
Consult with stakeholders in the company to see if it is possible to increase sales output, perhaps considering online sales. If this isn't a possibility, consider a joint venture with another company. Provide training for your employees so that they can focus on offering the best customer service and increase sales. Rather than just processing orders, your staff will start to recognise a sales opportunity, creating repeat customers.
Review your clients and consider increasing their credit limit to increase sales, but carry out a credit check first to make sure they are reliable. Refresh your products and services so that you always have something new to offer customers. You could even add to the product range to increase interest.
Perform a benchmarking exercise so that you know whether you are selling at your optimum price, or underselling yourself. Compare quality of goods and services with a competitor and make sure you have a Unique Selling Point.
Lastly, be sure to review your inputs and outputs on a regular basis so that you are aware of costs in the business and any potential difficulties.
Managing a company can be a complex affair, especially when you are trying to increase profits in a small company. If you would like to speak in confidence about your business profits, contact Sollertia to arrange a meeting.