As this year closes and we begin into a new start, it is a better time than ever to look over your business operations and analyse how you can improve profitability.
Below, we have outlined four steps to consider:
- Gain new customers/clients
One of the best ways to increase profitability is to gain more customers to use your products or services. However, using this tactic to grow your business can be more costly than you think, as sometimes it can cost more money trying to obtain new customers than it does to retain current ones.
A cost-effective way to win new customers is to offer incentives to your current ones – to urge them to refer your business.
- Let go of unprofitable products or services
Removing certain products or services that you have offered for a while can be daunting to do. But, if these are not profitable, then there may be no point in keeping them around. Plus, your efforts would be better suited to products and services with the highest gross profit margin.
Once you identify these, you can either remove the most unprofitable factors or review them for improvement.
- Reduce inventory
Improving cash flow can be as easy as taking control of slow-moving stock. For example, keeping on top of expiration dates or discontinued inventory can help to reduce fewer losses. Additionally, ordering more often can enable you to compare prices and benefit from any seasonal or overstock clearances and discounts.
- Review prices
Increasing your prices can be a scary thought, especially since the UK is in the process of recovering from the impact of the coronavirus pandemic and costly changes due to Brexit. But, a small increase can go a long way in helping to improve your gross profit.
We advise businesses to review their products or services’ costs regularly and adjust the prices if needs be.
Want more information or advice on improving your profitability? Contact our experts today to find out how we can help you!