A key part of running your business effectively is to know where you make your money and which areas of the business just aren’t pulling their weight. Then you can put into place strategies to improve your bottom line.
It can be hard to look at your business objectively, which is why seeking the advice of experienced professionals can add real value to the process. Some straightforward steps you can take include:
- Look at how your business’s profitability compares with the industry average. If you’re falling behind, you need to find out where you are going wrong.
- Review your fixed and variable expenses. Cut back on things you can do without, such as new office furniture, but think very carefully about losing personnel – redundancy is not a cheap option and in a year or so, you may need the skills and experience of people who are no longer with you. Recruiting staff to replace them will then be another substantial cost.
- Target a ten per cent saving through “bottom up” budgeting, involving everyone with financial control over an area of the business.
- Get your employees involved in expense and cost-cutting efforts. Asking for their suggestions will help them to feel more involved in the business while offering incentives for helping you to reach profitability goals will help to build morale.
- Review your list of products and services and eliminate those that are unprofitable or not central to your business.
- Consider adding extra products or services that complement your current portfolio without adding to marketing or advertising costs.
- Think carefully about accepting every contract and consider how it will generate cash and add to your profits. Be wary of taking on non-profitable work that simply increases turnover.
- Get rid of “can’t pay, won’t pay” clients if necessary and build on relationships with your better customers
- Review your main business processes (such as sales processing or shipping) to see you can make them more efficient or can outsource some activities.
[ 2 comments ] ( 375 views ) | permalink
Calendar
