Any business owner worth their salt will be on the look-out for new and innovative ways to increase the profit and growth of their venture.
If that’s you, you’ve probably already worked out how branding can help get customers ‘through the door’, and keep them coming back; or simple things, like having a Mission Statement well advertised, can keep your entire team – and you – all pulling in the same direction.
A very obvious, but not as popular, way to increase your profit margin is to cut down on your expenses. This can be difficult to do, as sometimes you have to be a bit ruthless to be effective. Unfortunately, there is little room in business for sentimentality, especially if you operate in a saturated or (Source)
competitive market. Below are a few ideas to maximize your profit. Be warned though; they’re not for the faint of heart.
Scrutinize Your Workforce
This first one is an incredibly difficult one to commit to; however, you need to consider how important it is to your goals that you increase your profit margin. This isn’t necessarily about cutting loose any staff who aren’t pulling their weight; it’s about trimming the fat for a more streamlined operation.
Imagine your business as a stripped out race car; passenger seats, satellite navigation and electronically heated seats are lovely to have, but they aren’t going to help you win the race, they will slow you down. Ask yourself: Do you need a whole department for marketing, or does that, in fact, fall under someone else’s job brief? Is this particular aspect of your business something you absolutely need to be managing in-house? Outsourcing certain departmental tasks could save you time and money which can be put to better use elsewhere.
Keeping this minimalist approach in mind as you grow is a great way to keep your overheads down, however, if you are trying to cut costs rather than slow their growth, you may find this a hard one to commit to, especially if your workforce is particularly close-knit.
Consider Shutting Up Shop
Be honest with yourself as to whether having a brick-and-mortar business is helping or hindering you.
These days, many people choose to shop online, and will possibly come to your store after having first found your website.
Renting and maintaining a property is expensive, and basing your business out of a physical shop is a very traditional option that may well be hurting your bottom line. Companies like le-vel thrive maximize profit by having a minimal physical footprint.
However, you may not need such drastic action. Simply adjusting your opening times could save costs on staffing and electricity. If your business is open from 8 am till 6 pm, but hardly anyone walks through the door until 5 pm, at which point it becomes incredibly busy, you may be wasting huge amounts of money being open when no-one visits.
Having long opening hours is a great way to increase your transaction count, but if you are spending twice as much to stay open longer as you are making in sales, you might as well be throwing that money down the drain.
Renegotiate Or Switch Suppliers
If your business involves purchasing from other companies, then it is well worth entering into discussions with them about your account.
If you have been a long time customer, see if you can negotiate some sort of discount. If you are able to gain the same service elsewhere for less, then let them know; they may be more willing than you think to lower their prices in order to keep your business. Even if you don’t have a product supplier to negotiate with, there is always your electricity or telecoms provider.
Companies like these are always competing with each other for your custom. Switching to a different tariff or another provider could save you a huge amount every month. Just be sure that in switching, you don’t lock yourself into any particular tariff for an extended period of time. Some companies offer lower rates initially, but increase them massively after a few months, leaving you locked into a contract that is worse than the one you originally left.
Some of these options may seem a bit on the drastic side, but when it comes to sustainability for your business, you should consider and carefully weigh up every option before deciding which is best for your needs.
Hopefully, you found at least one of these solutions applicable to you, and you can sit back and enjoy that extra profit for your business rolling in.