How to Increase Business Profitability
Increasing profitability is crucial if you are to have longevity in the marketplace. It is critical to business growth and sustainability. There are a number of areas you can focus on to help to maximise profits. Here are the most obvious.
It’s not uncommon to fritter a budget when you’re a start-up or new business, particularly a marketing budget. This is expected to a degree as you find your feet and discover what generates the best ROI. What’s important is keeping track of this activity my comparing data and stats each month, and then honing your budget spend going forward, to invest in the areas that bring you success.
It goes without saying that if you can minimise wasted costs, you will maximise your profit. Part of that comes from culling the activities that bring you no return, but another is to look across the business to assess what areas might be haemorrhaging unnecessary costs. This could be things like staffing, systems and software or office costs. Ask yourself, ‘what can you live without’. If you can’t do without it, is there a way to shave costs off it?
Artificial intelligence has actually done the opposite to what people expected. To begin with people feared that the introduction of machines would make staff redundant, but actually what we have seen is workforces retained and efficiency enhanced by the combination of both people and robots. The introduction of business apps has made mundane processes more automated, freeing up staff to work on other tasks.
Increasing volume of sales
Vamping up your sales activity is natural the way to increase profitability through business growth. If your turnover is bigger, then so too is your profit, as long as you are not lowering your margins. Sometimes a greater volume of sales can warrant a discussion to increase your profit margins if you use third-party suppliers and this is worth looking into. Other ways to increase sales include special offers and ad campaigns.
The increase in prices for goods and services is natural over time and every business has the right to build in inflation. Depending on your industry and your competitors, you can push your prices up as regularly as you want, as long as you remain competitive and it’s not at the detriment of losing business. Whilst it’s always good to try and freeze prices as long as you can to retain customers, a small price increase here and there is a great way of accruing an instant boost to profits.
Check back on our blog for more advice and tips on how to improve your business.