Month: April 2021

4 Ways to reduce Costs and Boost profitability

Leave a Comment / Business Management, Cash Flow / By / November 2, 2021
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Not Sure Why Your Bottom Line Isn’t Pretty?

Sometimes, Overspending Can Hurt Your Profitability Despite Your Record Sales.
Profitability doesn’t only come from sales numbers. And a profitable business isn’t always the one with the most customers and the highest sales.

The sign of a business profitable depends on what’s left in the account at the end of the month or the fiscal year.

It’s important to account not only for the money coming in but also the money going out. That’s why cutting costs is one of the best ways to boost profitability… assuming that you do it right.

Tip #1 – Address Material Costs

Sellers of products are most concerned with raw material costs. That’s why increasing profitability can be as simple as lowering manufacturing and or development costs. You’d be surprised at how much this move can make your business profitable.

Tip #2 – Reduce Labour Costs

Is there something in your business that you can replace with an automation system? Have you considered hiring a VA as opposed to an on-site assistant? Reducing the amount of money spent on wages can also boost profitability when you draw the line on your finances. So, evaluate the daily tasks that your team members perform and look at some of your own duties as a business owner. In today’s environment, outsourcing is one of the best ways to cut costs. It’s also one of the smarter ways to hire as you may have access to a wider pool of experts. Properly executed, you can lower costs and maintain a high level of quality with outsourcing.

Tip #3 – Manage Expenses

Many Businesses Are Overpaying For Marketing. For example, hotels may work with a variety of travel agencies even though a couple of them may be bringing in the bulk of the bookings. In that scenario, it may be a good idea to drop the non-performers. The same principle applies to all other expenses and services. If you pay for things and they don’t end up improving your business or what you offer, these may be expenses worthy of the chopping block. Needless to say, this would affect your bottom line directly.

Tip #4 – Know What Costs To Cut

If only cutting costs were simple, right?

Most business owners don’t know where to start. If you’re one of them, it’s ideal to start by performing an internal audit of your finances.

Identify where all the money comes and goes and decide what you can or can’t cut.

Tip #5 – Get Better Deals

Many industries work with vendors, which happens to be a great area to look at if you want to boost profitability.

You may already know that it’s possible to renegotiate vendor contracts, though it’s easy to be put on the back burner. Getting better deals, however, doesn’t always have to involve other vendors, as you can also leverage your relationships with existing vendors.

You can even consider changing service providers and utility contracts.

Cut Costs Smarter, Not Harder
You don’t have to make massive cuts in a single department. Even small amounts add up to significant savings if you make enough of them here and there.

These tips are particularly helpful to anyone operating a cash flow-dependent business. That said, they apply to both B2B and B2C companies looking to boost their bottom lines.

4 Tips For Getting Your Business Through Tough Times

Leave a Comment / Business Management, Cash Flow / By / April 3, 2021
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If you’re a small business owner whose company hasn’t gone through hard times, that’s great but it’s likely to happen at some point. As much as we dream about being brilliant enough at business that we’ll never face slow times, there are many things beyond our control that can negatively affect our business.

It’s highly likely that the Coronavirus and it’s resulting impacts, could put some significant pressure on your business.

Here are four tips for getting your business through difficult periods so you can look forward years of business ownership.

Reach out to others

Focus on your existing customers When companies go through tough times, many owners turn their focus to bringing in new business. The downside is that existing customers are often forgotten, but those are the most efficient people to make sales to. You don’t need to stop marketing yourself to new customers, but make sure you give extra focus to the customers you already have, to ensure they remain loyal. Find out what their current needs are, how successful you are at meeting them, and what you can do to maintain an ongoing relationship. Communicate with them, and always provide exceptional customer service.

Reach out to others

Chances are, you aren’t the first person in your industry to experience tough times. Talk to other people who have been in similar situations to learn how they navigated those challenges. Ask them what did and didn’t work for them, and what they learned from the experience. Some—if not all—of their answers could be applicable to your business, or could at least inspire a solution.

Examine your marketing plan

Your marketing plan brings in new customers. Now is the time to consider fresh marketing ideas to bring in new revenue. Is there an area of your business you haven’t promoted before but could bring in clients? Is there a new way to market yourself you haven’t tried?

Examine previous marketing efforts to determine how successful they were. If they weren’t successful, stop wasting your valuable time and money on them. Use your efforts on something new

Improve your cash flow

Assess your company’s financial health to see if there are ways to improve cash flow. Can you charge clients a deposit or encourage payment up front to increase cash flow? Are there products you sell or services you provide that bring in revenue more quickly than others? Are there ways to save money that won’t hurt your business in the long run?

It can be tempting to eliminate staff, but when things are good you’ll just need to hire employees again. Doing so costs time and money. See if you can find small ways to save money that won’t negatively affect your business when it starts booming. Cutting overtime, for example, can save you money without losing staff.

Make sure you can account for every dollar your business spends. Don’t hide from creditors, communicate with them to find out if you can restructure your debt or extend your terms. Free up as much money as you can without setting yourself up for failure when things turn around.

Final thoughts

Chances are your business will go through tough times at least once. It’s important you take action to help get you through it, rather than crossing your fingers and hoping the difficulties pass.

The steps you take during these challenging periods will help you, but they can also help set you up for increased success in later years. 

Got a question? Please don’t hesitate to get in touch.