Growing your bottom line can be hard sometimes, that's why we put together 5 key areas of focus to help increase profits.
1) Identify wasteful expenses and do it fast.
While cutting costs alone will not jump start your bottom line and you’re not going to replace a new large sales contract by saving a few dollars here and there. However, having a monthly review of your variable expenses will definitely give you a sense of where the business is spending and how you can trim unnecessary costs.
Every business is different, for example there was a computer hardware company that bought used equipment, had it refurbished, and then re-sold for a profit. Volume was the name of the game in this business; however the money was to be made on the buying side. If you didn’t buy the right type of equipment that your customers would be interested or if you bought cheap equipment that was essentially scrap and couldn’t be re-sold you were basically burning through cash.
This was more of executive team / management issue, but I’ll get to that in point number 3.
Note: Do not cut costs if it will decrease the quality of your product or service, cutting corners for a short term gain, will negatively affect the health of your long term profits.
2) Make sure your marketing and sales team have monthly targets.
Sales are the lifeline of any business, and for a healthy bottom line you need an effective marketing and sales team. Setting marketing and sales targets, such as leads, following up, developing your pipeline and training your staff on your CRM system. These targets need to be clearly defined and quantified.
Marketing efforts and strategy need to be closely monitored on a weekly basis in order to assess what is working and what is not. Identifying these trends is not enough, you need to execute your strategy, focus on what is working, and implement the change.
Communication between the marketing and sales team is critical as well, because as a team you want your staff to bounce ideas off each other. This builds strong working relationships, molds leaders and also drives everyone to work together to hit your sales targets.
3) Management sets the tone.
Strategy in business is everything.
I will share a quote that I always found interesting from the movie Margin Call, “there are 3 ways to win: be first, cheat, or be smart, now I don’t cheat and even though I think there are a lot of smart people working here, it is sure a lot easier to be first”
Being first is the huge take away here, or rather taking action and not being complacent. Your management team must review the business plan, monitor progress and take action to make the improvements necessary. They set the tone from the top, and your teams will follow should you make a move to change a marketing strategy, or roll out a new process to improve operations.
The key is communicating the plan, action steps, and the result if executed. You must lead by example and take the actions necessary so that your teams will follow. A plan to build operational efficiencies, reduce expenses, and drive sales is only as good as the management team that executes and gets their teams to buy in.
We hope you found these 3 points helpful for identifying ways to
increase profits for your company.
Should you have any questions, please contact one of our partners at MP GROUP below. We would be happy to provide some insight on how your business can increase its profits in the next year.