7 tips to increase your business profits
Increasing profit is a crucial goal for every UK business...
Increasing profit is a crucial goal for every UK business, whether they’re a small business at the beginning of their growth or a more established company.
Margin is perhaps the most important metric you can measure in any business, and a healthy margin is a sure-fire sign of a booming business.
But just how do you ensure that you’re getting the most from out of your enterprise. Here, we’ve compiled seven great ways by which you can increase profit.
- Review your supply chain
Analyse all aspects of your supply chain. Try working out better deals with each of your suppliers. Dealing in bulk usually puts you in an even better position.
- Work out your current margins
The first key to increasing profits is calculating your current margins are. Benchmarking these against your competitors is another good way to start. If you’re aiming to boost profits, you can either increase prices or reduce costs – but to achieve this, it’s key to know how much you’re making.
- Increase your efficiency
So much time and money are lost in business due to inefficiency. Boosting your margin might be as simple as reducing waste. Take an in-depth look at your processes - what are the most vital processes in your business, and how can you improve them to at the same time reduce waste?
If you are thinking about increasing prices, you should carefully consider about how you go about it. In an ideal world, it’s best to implement a series of small price increases over time, rather than a large increase in one go. Letting your customers know the reasons for a price increase is also crucial.
- Upsell and cross-sell
Think about ways in which you can persuade customers to move on to a more premium product – otherwise known as upselling. Alternatively, you could also consider offering additional complementary product – also known as cross-selling. Upselling and cross-selling should both be factored in your development and marketing plans. It’s crucial that these products are marketed with the same intensity as your primary product.
- Focus on premium products
Still, wherever possible, focus your efforts on the products and services with the highest margins. Offering loss leaders is also a good move; those products or services to entice customers before you engage in upselling or cross-selling.
- Plan for every eventuality
Of course, there will be always moments when business costs rise for reasons you can’t control - for example, shortage of materials or increased production fees. That’s why it's vital to have contingencies in place - these should be factored into your margin from the very beginning by including unexpected downturns in your pricing.