Improve your profit margins

It has been well documented by many business advisors and commentators that there are 4 fundamental ways to grow your business:

  1. Increase the number of customers of the type you want
  2. Increase the frequency of customer transactions i.e. the number of times they come back
  3. Increase the value of each sale to customers
  4. Improve the effectiveness of each process within the business such as manufacture, distribution and cash collection

 Whilst you cannot disagree with this approach what if it is too difficult to achieve items 1 and 2 in the short term and you are unable to attract sales growth? If this is the case business owners should focus on improving profit margins by:-

  1. Understanding your margin and benchmarking within your industry
  2. Analysing your margin by product/service – removing less profitable
  3. Reviewing and (where possible!) increasing your prices
  4. No discounting!
  5. Differentiate your product/service to improve your prices and customer retention
  6. Reviewing suppliers prices and negotiating discounts
  7. Minimising stock holding and work in progress costs
  8. Reducing waste

By following these 8 steps profit improvement can be achieved and with the improved cash flow a strategic sales plan established and implemented to achieve the sales growth you require.

At taylorcocks we assist clients in facilitating business change and building businesses of real value. Want to change and build value?

 Your first step is to start by completing this diagnostic:-

This diagnostic takes less than 5 minutes to complete and you will instantly get an email advising you what your score is for 10 key issues and some guidance on what you need to do to improve your 3 top issues.