There’s a lot of truth to the old adage: turnover is vanity, profit is sanity. Truer still, is the high number of business owners who quickly lose sight of this mantra.
There are many companies out there generating profits five or six times less than their overall value. To pursue the long-term goals you have as a business, you need to focus on raising profit: as this is what reigns supreme in the corporate world.
In our latest blog we offer three solutions for maximising your margins.
Concentrate on the bottom line of business
By concentrating on the bottom line of the business, you can build a solid foundation on which to start generating a healthy profit in no time.
If your current margins are low, you need to scrutinise your spending habits and see where all your money is going.
Are you investing ahead of the curve (e.g. bringing on staff who will later recompensate by way of earnings) or are you being profligate with team socials, client hospitality and office luxuries?
To maximise profit, you need to get serious about what’s necessary and what’s not.
Cut back on waste
There’s another reason why a lot of businesses aren’t yielding as much profit as they ought to be: waste.
A staggering number of companies are absentmindedly narrowing their profit margins by refusing to re-examine their discarding policies. Very basic things like excessive printing, delaying green initiatives, and buying too much stock (some of which may never get used) can all contribute.
Forecast the future
Failing to plan is planning to fail. To keep those profit margins high, you need to build out a robust plan. Take your time to sit down and create a strategy that your business can stick to and thrive.
The trick is making sales growth predictable. When you have a clear idea of what’s coming in on a regular basis, you can create a strict guide for spending on staff, resources and the little luxuries when you can afford to reap rewards.
This way, you’re all set for a profitable future.
Check how much you’re charging
If you’re doing everything correctly and can’t establish why your profit margins are quite so low, the answer could be that you simply aren’t charging your customers high enough prices.
When businesses start out, they have relatively small running costs and can afford to charge less than the market rate. However, as you grow, so will your overheads –meaning the low prices that made you profitable once-upon-a-time are nowhere near high enough.
If you’re hanging onto old pricing models or old clients who you’ve had for years on a low rate, it might be time to look at things objectively: What would be the overall impact if you raised prices by just 10%?
Realise the power of profit with N7
Here at N7, we offer business guidance that’s transferable to all kinds of marketplaces. Our experience as business owners has taught us many important lessons about budgeting in the right way to yield higher profits – and this is what you should be focusing on to make your brand a success.
We can help you pinpoint elusive problems, find the perfect solution and guide your path to bigger revenue. Simply get in touch with our team on +44 (0)7730 251 028 for more information.