Profit is vital to every business, what is the point of being in business if you don’t make a profit?

So here are my tips on how to improve your profitability:

1. Weed out loss making products, clients and departments – concentrate on high margin products and services
2. Reduce Employment Costs – use Freelancers instead of Permanent Employees where appropriate
3. Use Virtual Communication Technology – meetings can be held over the internet with Skype or other systems, it will cut traveling time and costs
4. Use Social Media and Networking – marketing can be costly and the results can be hard to measure, use your contacts to generate leads and sales and always ask for referrals
5. Increase Productivity – eliminate wasteful and unnecessary processes, I was told it used to take 17 people in the NHS to change a light bulb on a hospital ward (requisitions, approvals, payments, changing the bulb…) the solution to cut wasted processes was to keep a stock of bulbs on the ward
6. Negotiate with suppliers – always look at ways to reduce cost including using alternative suppliers
7. Understand your clients requirements – the client knows what he wants and what represents value, if you deliver value you will get more business
8. Seek add on sales – what other products or services might be useful to your existing clients
9. Keep an eye on your competitors – competitor analysis will enable you to understand differences in price, distribution, market and demand
10. Find New Markets – use market research to expand into new areas
11. Decrease Overheads – analyse all of your overheads including Rent, Rates, Utilities – could you sub-let part or your premises or reduce waste
12. Reduce Stock Levels – can you turnover your stock more quickly or buy to order
13. Improve your Cash Cycle – reduce slow payment by debtors, invoice promptly and settle disputes quickly
14. Invest in Technology – automate processes with ERP systems
15. Use Key Performance Indicators – KPI’s help you achieve your goals

steve@bicknells.net