Whilst the constant droning over Brexit and politics has worn on the psyche of everyone in the United Kingdom; the reality for small business owners they need up their profits if they hope to survive the uncertainty.
This is not just because profit is how we discern a “successful” business from an “unsuccessful” one. It is because your very future as a business owner depends on it. As such, here are some tips on how to make your business more profitable overnight.
- Have a Plan
This goes beyond just hoping to make enough turnover to keep the lights on. Your plan needs to encompass how your business can grow and importantly what are the key factors which determine success.
Granted, you probably don’t have the time or the resources to hire a consultancy to craft a business plan for you. But if you focus your plan to one or two pages with a clear idea what impacts your business, what you can do, and by when, you will have done more than most of your competitors.
- Be Thrifty but Not Cheap
In business being penny-wise and pound-foolish often leads to one result – receivership. Don’t let this happen to you. Instead, focus on the costs which have the most impact for your business such as labour and raw materials. By putting your daily efforts on these costs, you will find that a great you will not only have a great impact on the operations of your business, but you’ll uncover other savings opportunities as well.
Beyond this, schedule time to review other non-core costs as these can often creep up over time and could erode the strides you’ve made in other areas. For example, if you are starting to experience increased hosting costs because your current plan doesn’t offer enough space or resources, then you might want to consider making a change.
Remember the goal is to have your fingers on the pulse of your business, not squeeze the life out of it. As such, spend most of your time focusing on those costs which make up most of your expenses and then set time on a monthly or quarterly basis to look at the bigger picture and decide what is best for you.
- Productivity Matters
Doing more with less is another way to increase the profits of your business. For starters, you will want to focus on any obvious wastes inside your business – for example, better fleet management if own a trucking company. Affecting change on this low-hanging opportunity will not only increase the productivity of your team but it will help your business to end up with more cash at the end of each day.
Beyond this, set the expectation that good enough is never good enough in the sense that you are always looking to improve on what you did yesterday. This approach will galvanize everyone to find opportunities to grow, thus cementing any productivity gains for the long run.
- Look at Your Pricing
It goes without saying that if you can charge more, you will make more money. However, looking at your pricing isn’t always as simple as taking up the list price for your goods and services. In some cases, you might be better served by offering a discount, while in others you might want to better target your offerings to the right customers. Then there is the nasty matter of the competition, who can have a big impact on your pricing strategy.
When it comes to increasing your sales and profits, look at your prices and determine what is the right approach for your business. This includes looking at your competition as well as determining how much your customers will be willing to pay for what you offer.
Also, do you want to price for volume or for maximum profit? While each option can increase your profits, it often happens in different ways. When you price for volume, the key to profitability is controlling your costs and your inventory. When you price for maximum profit, you want to make sure that you have right-sized your overheads as a higher price often leads to less volume.
- Control Your Cash
Many small businesses get in trouble because they don’t have cash management controls. In fact, it doesn’t matter if you can keep your costs in check if 100 percent of every pound rung up doesn’t make its way into the till. As such, institute controls on who can handle cash and how often it should be counted and deposited. If possible, try to go cashless as this will decrease temptation for cash to go missing.