Growing Your Business with YCN Series – #4: How to improve profits in 7 practical ways

Growing your business means more cash for you now, and a higher sale price in the future when you decide to eventually sell your business.

The 4 key areas covered in this series are:

1. Expanding and improving your customer base
2. Finding new markets – with existing products or services
3. Developing new products or services – to open new markets
4. Improving profit (what this article will be focusing on)

Making your business more profitable involves looking at ways to increase sales revenue and decrease expenses, and also by benchmarking your business (to identify areas where you can save money). In this article, we’ll outline 7 different ways to improve your business’ profit.

IMPROVING PROFIT

• Automate processes to save time. Look at current processes you could change to save you time or money. One way could be changing from manual systems to automatic ones to free up time for more important tasks.

• Lower energy use. Look at each area of your business separately and come up with ways to reduce energy use. For example, if you’re a supplier and you hold your inventory in a warehouse that’s busy 24 hours a day, lighting and heating may be major expenses. Can you switch to cheaper sources?

• Reduce operating waste. Identify how to produce more efficiently to reduce left over materials, which will lower your cost of goods sold. For example, if you manage and own a large department store, are there ways you could reduce total staff hours to lower costs.

• Investigate ways to improve your output. Improve your output to deliver your products or services faster. Add staff, upgrade to the latest equipment, or change software; try anything to speed up production.

• Negotiate ways to improve your margin. It sounds obvious but whichever way you choose to increase prices it all goes straight to your bottom line. Consider the impact on demand if you have price-sensitive customers. For example, you might be a goat farmer selling high quality meat, cheese and milk. Does your product have any leverage to negotiate a higher price?

• Identify what overheads you can lower. Audit all your expenses to see what can be lowered without affecting your business operation. Re-negotiate with suppliers and reassess any subscription services or set pricing plans.

• Build a process to collect money owed to you faster. Take a close look at your debtors to establish which ones need extra motivation to pay you sooner. Consider changing your policy towards new debtors by tightening payment terms or adding a discount for quick payers. Make sure you have Internet Banking as an option.

NEXT STEPS

• Why not book in for a 30-minute meeting with YCN to help you with brainstorming the above ideas and create a tailored Action Plan to help you improve your business’ profits!

• If you have not already done so, be sure to check out all the previous articles in this Growing Your Business with YCN Series to assist you with helping your business to grow and flourish.