Profit. Sometimes it can just feel like luck or the universe is not on your side when it comes to the bank account. But that’s not the truth.
There is no luck or fate in business. Making a business profitable requires planning with the application of the right skills, knowledge and innovation.
In this blog we’ll look at five relatively straight forward ideas that can help you increase the profit within your business.
Speed Up the Cycle and Eliminate Tasks that Don’t Add Value
You can speed up the design cycle to generate more production and productivity. Time is money and when you reduce the production time, you can effectively and efficiently produce more. More production translates into more sales and more profit.
Similarly, there are tasks that will not add value to your product. If no value is added to a product, it costs you more but yields no profit. You will save dollars by eliminating the costs associated with unproductive or underproductive tasks. Every dollar you save by this means is your profit.
Think of Ways to Increase Price
Pricing reviews should be a part of your business plan.
If you are a service provider and you bill hourly. You can subtly increase your hourly billing rate to generate more profit.
If you sell products then you must identify ways you can increase the price of your product. One of the ways is to make value addition in the product. The other way is to improve your marketing and sales to sell at a higher price. That is one sure way to make more profit.
Most businesses set a low ben Making a business profitable is something many businesses who found themselves in the red have experienced, even with the application of the right strategies and steps.
chmark on price when they started out because they were hungry for business.
Over time, they made price increases barely to set off the inflation rate. Re-examine your pricing policy. Are you selling cheap? If yes, there’s no need to because you can still compete in the market at a higher price if you already started out low.
Review Your Operational Staff
Most small businesses may have a surplus administrative and operational staff they may not be aware of. These businesses could remain as efficient and productive with 25% lesser staff as they are now. If that is the case with you there are ways to reduce the operational cost which might add to your profit.
You need not be so brutal as to fire them. Instead, you may delay hiring operational and admin members as you grow.
Compress Your Sales Cycle
That’s the best way to close your sale faster. The rate at which you sell determines the volume of sales and more sales come with a faster sales cycle. The bigger the sales volume the higher is your profit. This will also decrease your per-sale cost and free up a lot of hidden cash flow.
Identify Your Optimal Inventory Level
Make an informed estimate of the inventory level and costs associated with them. There are costs of the inventory, the cost associated with capital, insurance, storage, and several more. Are the costs worth the return? If not, you must rethink your optimal inventory level.
You may reduce the inventory level to reduce costs and increase profit. You may have to do away with a lot of inventory you may not be able to sell. Consider donating them or scraping them away to free up space and your mental burden.
Help is always available
And don’t forget… You should never underestimate the real value in seeking help for the answers you don’t have. Business professional such as myself are always available to discuss your options, ideas and help you put a plan of action in to place.
Ainsworth Accounting Solutions are here to help you with any of your business accounting needs and we’d be happy to speak with you. Simply contact us today to take the next step!