Increase your profitability
For example, you may always produce a particular type of product at a specific time in the month. But would it ease your cashflow if you produced, shipped and invoiced it earlier, or later, in the month? It's useful to get an idea about how comparable businesses approach similar issues. This is known as benchmarking.
What Is Consulting And Why Is it So Lucrative?
Benchmarking can be on a basic, like-for-like level - such as comparing energy costs between similar businesses - or it can be more detailed, such as sharing data and analysing production and stockholding patterns with other businesses you trust. The additional perspective that benchmarking offers can provide new ideas and momentum to make your business more efficient. When benchmarking, it is a good idea to focus on similar areas to the key performance indicators KPIs you have already identified. Although there are no standard templates you can use to benchmark your business, you could take the following steps:.
Improving your business' profitability can help you to reduce costs, increase turnover and productivity, and help you to plan for change and growth. How you increase your business' profitability will depend on a number of factors - such as the business sector you work in, the size of your business, or its operating costs. However, you could review these options:. You can connect with us through the contact form, call us or contact your local Business Gateway office. Every successful business regularly reviews its business plan to ensure it continues to meet its needs and responds to variations in the market, the economy and customer base.
Marketing and Sales Even the best business idea calls for some sales and marketing savvy. Human Resources Looking after your people is a priority. DigitalBoost Get ready to make more of your online presence. Running a business. Increase your profitability Every business can improve its profitability. Guide 10 min read. Four ways to increase business profitability Manage your costs Review your offer Buy more effectively Concentrate your sales efforts Expand your market Boost productivity Checklist: improving the profitability of your business Next steps.
Four ways to increase business profitability. You can also expand into new market sectors, or develop new products or services. Manage your costs. Have you looked at your key cost areas?
10 Tips to Increase Profits in Your Business
Your key cost areas to consider are: Suppliers - are you getting the best deal from suppliers? Can you negotiate better terms or do you need to change supplier? Can you drive better deals by consolidating your supplier base? Can you buy on a 'just in time' basis to make more effective use of your working capital? Finance - do you need to review your finance facilities?
Raise Your Prices
Are you using any loans and overdrafts effectively? Premises - have you examined whether you are getting the most out of your space? Are there more efficient ways to use your premises? Could you sublet some unused space? Production - have you assessed whether you can cut waste and lower the costs of your materials. Check whether you can adapt your production processes so they are more streamlined, using fewer working hours or resources to cut labour costs. Uncover real costs Using activity-based costing is an effective way to find the real cost of specific business activities.
Review your offer. Pricing considerations It's a good idea to review your pricing regularly. Find your best customers It's not just your price list that affects your profitability - the type of customers you're selling to can also make a big difference. Can you sell more to your best customers? Consider the following opportunities: up-selling - selling them premium products that make a greater contribution to your profit cross selling - analysing what they buy and offering complementary products diversifying - identifying a need and developing new products and services to meet them.
Buy more effectively. Get the best deal from your suppliers Identifying your key areas of expenditure will show where you spend most money. Cut waste throughout the business A review of common areas of waste could help you see how to reduce them, for example: Can you cut your power costs, e. Are you getting the best deals from your power suppliers? Are you paying for unused services e.
Increasing both your number of clients and the average amount each client spends on each transaction they do with you, using some of the techniques listed here, is the fastest and easiest shortcut available to you to reach your goals. These techniques can instantly multiply the results of everything else you do and can give you geometric growth and dramatically better profitability for very little extra workload … or it means you can reach your goals faster, with fewer customers, using less effort and expense and with less hassle.
Offering extra value or a better deal right at the point of sale, when your customers are at their most receptive, is one of the easiest and most effective ways of instantly improving the size and profitability of your sales. Up-selling is getting your customers to buy a better, more expensive, or more sophisticated product that genuinely adds value to their transaction. Cross-selling is getting your customers to buy an additional product or service that will give them a superior outcome. Combining a group of individually desirable products or services that naturally compliment each other and offering the complete package for a single fixed price that represents almost irresistible value to your customers, compared to buying the components separately.
This can dramatically increase your incremental profits and also allows you to sell complete solutions that lock the customer into the use of those products. This is definitely a win-win situation for both you and your customers. They get a simplified purchasing process and a discount on a complete solution, while you increase your sales and can often own your market. This technique has transformed the fortunes of many organisations. Increasing the size of your minimum purchase unit is a powerful and remarkably easy way for you to increase your average transaction value.
This way, you don't have to worry so much about keeping the lights on, so to speak. Passive income will afford you the opportunity to make mistakes and not have to lose your shirt. It'll keep you in business and provide a basis to grow and market and scale quickly by giving you ample resources. Sometimes, acquiring other businesses is a very quick way to grow your own business. If you can find competitors or businesses in other industries that would complement your own, you could use them as platforms to scale fast.
Take a look within your industry and even outside of it to find potential for potential opportunities. Can you expand internationally? Can you take your existing offers and scale them internationally? What would it take to do business in Canada or Mexico or Europe? If you have a converting offer, international expansion could be a quick way to grow. You'll incur some costs. But, the potential for profits could be massive. Webinars are a great way to promote any product or service. It can also help you grow any business relatively fast.
Webinars provide an automated selling tool for literally taking any product or service to market and reaching a wide audience quickly. The webinar medium is great for captivating audiences to clinch sale after sale, automatically. Entrepreneur Media, Inc. In order to understand how people use our site generally, and to create more valuable experiences for you, we may collect data about your use of this site both directly and through our partners. The table below describes in more detail the data being collected. By giving your consent below, you are agreeing to the use of that data.
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