The general advice for increasing profits includes cutting costs, selling more, and improving the gross profit margin. Well, it sounds simple enough but in practice, a tad more complicated. Costs may already have been cut to the bone and further cuts could affect the quality of services.
Are you getting the best deal from your suppliers? Questions Gerald Irwin of Sutton Coldfield based Licensed Insolvency Practitioners and Business Advisors, Irwin Insolvency “If not, can you renegotiate prices, or find a different supplier who provides the same at a better value? It is always a good idea to take a look at your supplier relationships at least annually.
It is timely to remember that your prices may need to be adjusted to account for greater supply and labour costs, or to make you more competitive in your market. Customers perceive value partially based on the price they pay. Raising prices does not always translate into additional revenue, as you may lose customers who will always go for the lowest price.” Unfortunately, many businesses spend the same resources on low value customers as they do on high value customers.
When expending additional resources, target them toward the customers who provide the most revenue. “Certain goods sold or services provided allow for a greater profit margin than others as they require less costs and particular goods can be purchased in greater bulk. There are automated ways of doing things in order to reduce labour costs which does not always mean adding technology. Often just instituting a system, setting up a workflow, or grouping activities together can save time and make the job more efficient,” added Mr. Irwin.
As a business owner, if you are serving customers rather than opening up new markets, perhaps your time is not being most effectively used. It is always wise to know which activities put you working in the business, instead of on the business.