We hear it all time – “work smarter, not harder”, but what does it really mean? With more competition than ever, businesses are finding smarter ways to grow their profits, without increasing their prices. The smartest way to increase profits is to look at your bottom line and find a way to cut costs, but before you start streamlining your business you need to know exactly where to start.
Having an accurate and transparent way to assess and report on exactly where your business is now, will help you find those essential (and sometimes hidden) cost savings. Here are few tips on places you can begin, when assessing the best ways to grow your business, without increasing prices.
Start by looking at your profit margins to see what works and what doesn’t. Focus on the products or activities that are the most profitable, and minimise the ones that aren’t.
Try to cut any expenses that don’t add value to your company or customers. Consider what can be done without, for example selling off old inventory that’s just taking up space.
Stabilising your production system can help you to reduce your amount of surplus stock. Often there are cost savings to purchasing stock in bulk, so look at where and how you can make long term savings with your stock control. This will then free up your cash flow and profit margins. There may also be benefits to ordering more frequently, so make sure you do your research with suppliers. Having an accurate stock control will also help to avoid losses from expired or discontinued inventory.
Focus on supporting existing customers, and set yourself apart by competing in areas other than price. Maybe your business can beat the competition by speeding up its processes, or offering an additional value add service. If you identify your customer’s pain points, you may find a way to offer value beyond the product and price.
Helping customers to learn about your products or services, and what sets them apart, will improve their experience and ensure they’re getting the best value possible from their purchase. There is nothing worse than losing a customer to a competitor, for a product or service you offer, but they didn’t know about.
Standardising your procedures across multiple business sites or teams helps to ensure there is no wastage or inconsistent procedures followed, be it anything from stock control to sales. For example, using less energy when not required, or helping to improve staff productivity by omitting redundant procedures or upgrading technology.
Business management software such as MYOB helps give you a holistic view of all aspects of your business to ensure correct procedures are in place and omits costly errors.
Utilise your workforce’s full potential by creating channels for feedback and suggestions. If your whole team understand the company goals and aims, they can all contribute to ways to increase profits.
Reduce your operating costs by ensuring your team is equipped with accurate, up-to-date information. Streamlining the decision-making process will encourage efficient and informed business decisions, saving you time and money in the long run.
Lock in long term contracts which are to your advantage, but regularly renegotiate where possible. Looking at high expenditures, such as your lease or technology provider, can uncover some amazing cost savings. With new competitors or changes in the market place, you might find your existing contract is well above the industry standard.
Keep a close eye on all outgoings, including power and water bills. You might be surprised to find you’ve been overcharged or even incorrectly billed for products or services not received. Have a process in place to regularly review all contracts.
A well-run business generates higher profits, without having to sacrifice competitive advantage on price. Cut your own time in half, as well as the stress and anxiety of managing your business by implementing business management software.
Horizon Business Systems have been helping businesses perform better for over a decade. Contact us today to see how you can improve your profits, without increasing prices.
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