For all those in business "profit" is the reward for the endeavours put into the operation. However, many businesses have suffered during difficult times and businesses which had previously been producing good profits have run into difficulties and sustained losses. How, therefore, may profit be increased?
1. Market Ensure that you know your market and are technically able in all aspects of the business.
2. Product Ensure that your product knowledge is complete and your service of high quality.
3. Sales Ensure that sales are maximised, taking advantage of cost-effective means to increase sales - advertising, recommendations, promotions, leaflets.
4. Pricing Be wary of reducing prices to obtain increased sales or an increase in work. The danger is that gross profit is reduced and this reduction in gross profit is not matched by an increase in the gross profit arising as a result of the increased volume of work or sales.
5. Direct costs
Ensure that your direct costs are kept to an absolute minimum. This may well involve looking carefully at the rate charged by your suppliers, compared with those from your competitors.
Before changing your supplier, consider the service that you are receiving and whether or not this will deteriorate if the supplier is changed.
The objective of the above is to expand sales income while controlling and, if possible, reducing direct costs so as to produce an overall increase in gross profit. 6. Rates
For all those involved in charging a rate for a job it is important to ensure that your working time is used effectively. The average self-employed person should endeavour to charge for 35 hours per week, and as a useful discipline, a timesheet should be kept. This will assist in identifying the proper utilisation of your time. Research the rates charged in your industry by your competitors.
7. Overhead expenses Ensure that business expenses are maintained at an absolute minimum and that any additional overheads assumed by the business result in increased profitability and efficiency. Are you satisfied that for all new overheads you have reviewed the market to establish where to place your orders? Reliability and backup service are important factors to take into account.
8. Where assets are acquired on finance Be sure that you have obtained quotations for your finance from your supplier, your bank and a finance company.
9. Books and records Having endeavoured to set out a few very basic principles, you must be aware of your business income and expenditure. The proper keeping of your books and records is absolutely essential if you are to monitor the overall trends and patterns of income and expenditure relating to your business activities.
10. Professional advice Use your advisors to avoid pitfalls that can cost you dearly.
Please call Noel Murphy today on 021-4310266 to discuss further ways to increase your profit.