In the most basic terms, to increase profit in a business you need to either generate more money from sales or reduce your costs – or, ideally, both.
However, the right approach is different for every business, and there’s no quick and easy way of achieving higher profits. It takes time to start seeing results, and it’s usually a process of making small tweaks and monitoring their effects.
As a starting point, here are some of the areas to think about if you’re looking to improve your profits.
Look at costs
There’s almost always somewhere you can make savings, and as long as you make sure it doesn’t negatively affect your product or service, it’s worth looking at ways of reducing your costs.
One way of doing this is to streamline your operations, reflecting on which tasks are taking up the most of your time, and which could be automated or outsourced.
If you have a good relationship with your suppliers, you might be able to negotiate a better deal on the orders you make – have you asked if they could give you more for your money? Or charge less for what they presently supply? Your continued custom ought to be worth negotiating on.
Making sure your business is structured in a tax-efficient way, and that you’re claiming any reliefs you’re entitled to, could also help you to make sure you’re not spending more than you should be.
Spread the word
If you’re looking to increase your sales, it may help to focus on your marketing and advertising efforts.
Making sure you have a well-presented and functional website is a good place to start. With research showing it takes just 50 milliseconds for website users to form their initial opinion on a website, it’s worth investing in that first impression.
You could also look at your social media presence. This is a task that often gets overlooked, but scheduling regular posts on your Facebook or Twitter account can help you to reach more customers and build your brand.
Review your pricing
Undercharging is a common problem among small business owners. That’s not just an issue for your profits, but can easily lead to stress and burnout if you’re completing large amounts of work for a low profit margin.
You should keep reviewing your pricing as your business develops to ensure you’re charging a fair amount for the work you’ve done, and ensuring your profit margin increases with any cost rises.
Compare your prices to your competitors, and remember to consider the time you spend on the work as well as the more tangible costs of production and materials.
Get in touch
Figuring out how to increase your profits is one of the three key areas of our Love My Business service.
We’ll help you work out the best way to increase your profits with a full-day workshop, followed by monthly catch-up calls to see how you’re improving.
Talk to us for advice on your business.