21 May The quickest & easiest way to increase profitability
When I ask people how they can increase their profitability, they often assume they need to be increasing their sales.
And yes, increasing your sales volume and your average transaction value, is something that you need to be working on to increase your overall profitability, there is usually an easier way to start.
I’m amazed at the quick wins my clients can get just from following this, and so are they!
Okay, no more suspense…..the quickest and easiest way to increase your profitability is to reduce your costs.
I know, you know this already don’t you? But, can you tell me, hand on heart, that you know exactly what costs you had in your business last month and that each one is the lowest it can be?
If you can, then well done, and come back next week as I may be able to help you with something else.
If not, then take a couple of minutes to read the below points, and then, most importantly, spend 30 minutes taking action on them. This 30 minutes could be the most profitable 30 minutes you spend this week.
Step 1 – Understand your costs
Get out your last bank statement and go through each cost and make sure you understand it.
Step 2 – Stop the ‘gym memberships’
So many businesses end up with the ‘gym membership’ costs – you know, where you commit to a monthly payment for something that you never actually use? Do you have any of these on your statement?
What about adverts you’re placing that have never bought in any work?
Be strict and cancel these -right now!
Step 3 – Review your current suppliers
Go through a list of all the companies that are supplying your business with something, from printed materials to software, and do a quick assessment to see if you’re getting a good price. (This is a great job for a virtual assistant or an admin support person to do for you)
If you’re not happy with the price and you think you can get better value elsewhere, then go back to your supplier to renegotiate or switch suppliers.
Okay, so by spending just 30 minutes running through these steps, you should have a list of actions to take to reduce costs and therefore increase profitability in your business.
A bit of a word of warning though, I’m not advocating cutting out any costs where they add value to your business in some way. You will always need to have a healthy proportion of your turnover as costs, but stay close to your costs going forward and manage them well.
I’d love to hear how you get on with these steps so please let me know (especially if you make some savings!) by leaving me a comment below, or email me directly at Alison@alisonbradford.com if you’d prefer.