Increasing profit in the business can be done in a multitude of ways, and the most common answer is to look into your expenses. However, expense cutting can be a dangerous gamble for the long-term health of your business, so there are many alternatives you can address if you want to increase your profit. Here are some ideas that are quick easy to implement.
1: Find you best sales margin
Find the product you sell that has the highest margin and focus on it. By spending more time and effort on the products that have the highest return, you can maximise your profitability.
2: Review you pricing
Regularly reviewing pricing is necessary for profitability to be maintained. Business can be reluctant to increase prices. However, it is important to make sure that you are not simply covering your costs. Business must maintain a steady profit margin to stay profitable.
3: Discounting by adding value
Unless discounting increases volume of sales, offering discounts will eat away at your profit. Customer’s behaviour will also begin to change, and they will expect discounts for products and services in future dealings. There are alternatives to discounting that can be beneficial for customers. Offerings such as after-sale service, bundling procedures or offering membership are all ways that businesses add value for customers without affecting your profitability.
4: Find the best suppliers
Take the time to review your current suppliers and evaluate them compared to others that are in the market to ensure that you are getting the best value for money out of your suppliers. Also, ask for discounts when volume increases, if you can get bulk buying savings this greatly increases profitability. Regular review of waste is necessary; knowing your waste means you can effectively review your supplier necessities.
5: Flexible Staffing
Having flexible staff arrangements means you are can be fully staffed during peak periods without having the cost of a full-time employee. Making use of casual staff or sub-contractors during peak periods reduces costs of staffing.
6: Service your best customers
Often a small percentage of your customer base offers the highest amount of sales. By understanding the habits of your customers you can develop relationship management strategies that help get more sales. Collecting information about your customers buying habits can help build patterns, which can be capitalised through your marketing.
7: Tap into Networks
Industry organisations are often a source of discounted services for members. One service in particular that many offer is arrangements in place with insurers, which can often be one of the largest expenses.
- Upgrade technology
The greatest use of technology advances is freeing of your time. Look for options that will automate business functions, freeing you and your employees time to be more profitable. ERP systems are one of the greatest tools a business can invest in to automate processes. By centralising the businesses data, ERP systems can run processes quickly and efficiently.