capital gainimproving your profit


How to Improve Your Profit Margins

The fastest way to grow your profits is to improve your margins.

 

Easier said than done, right?

 

While many businesses don’t like to talk about margins, as they feel it is directly related to cutting quality, this simply does not have to be the case.

 

There are a number of productive steps you can take to improve your margins without sacrificing on the quality clients have grown to expect and love.

 

1 Know Your Figures, All Of Them

 

Before anything else, know your numbers pertaining to your business. Ensure your accountant is providing you with detailed reports, breaking down each individual cost, along with combined reports of related costs.

 

For example, if you’re in the restaurant game, ensure you know the cost of every single ingredient in your dishes. Without this information, you are not in an adequate position to know what is really costing you money.

 

2 Negotiate For Preferential Rates

 

Are you getting the best rates from suppliers? It is worth asking. While suppliers are interested in protecting their own margins, they also want to keep your orders.

 

We recommend making a habit of contacting your suppliers annually or biannually to ask for better rates. Make a compelling argument – especially if your number of orders has increased since then.

 

If they don’t budge, shop around. See whether you can procure equivalent stock at a better price elsewhere. As part of their model, some suppliers are known to match or better quotes you receive.

 

3 Cut Your Choices

 

In a world of excess, cut down on your offerings. Too many choices are not a good thing and often leads to decision making paralysis.

 

And the result? Choosing not to choose.

 

But, too many choices are not only bad for clients, they cost you money. Each additional product or service requires more employee training, inventory and more risk of not selling.

 

Rather focus on overlapping choices that won’t affect your business. Use accounting reports to figure out which items have the highest margins, which are not moving and which need replacing.

 

The fastest way to grow your profits is to improve your margins.

 

Easier said than done, right?

 

While many businesses don’t like to talk about margins, as they feel it is directly related to cutting quality, this simply does not have to be the case.

 

There are a number of productive steps you can take to improve your margins without sacrificing on the quality clients have grown to expect and love.

 

1 Know Your Figures, All Of Them

 

Before anything else, know your numbers pertaining to your business. Ensure your accountant is providing you with detailed reports, breaking down each individual cost, along with combined reports of related costs.

 

For example, if you’re in the restaurant game, ensure you know the cost of every single ingredient in your dishes. Without this information, you are not in an adequate position to know what is really costing you money.

 

2 Negotiate For Preferential Rates

 

Are you getting the best rates from suppliers? It is worth asking. While suppliers are interested in protecting their own margins, they also want to keep your orders.

 

We recommend making a habit of contacting your suppliers annually or biannually to ask for better rates. Make a compelling argument – especially if your number of orders has increased since then.

 

If they don’t budge, shop around. See whether you can procure equivalent stock at a better price elsewhere. As part of their model, some suppliers are known to match or better quotes you receive.

 

3 Cut Your Choices

 

In a world of excess, cut down on your offerings. Too many choices are not a good thing and often leads to decision making paralysis.

 

And the result? Choosing not to choose.

 

But, too many choices are not only bad for clients, they cost you money. Each additional product or service requires more employee training, inventory and more risk of not selling.

 

Rather focus on overlapping choices that won’t affect your business. Use accounting reports to figure out which items have the highest margins, which are not moving and which need replacing.

 

4 Grow Your Business

 

The nature of your business might mean that exponential growth is your only option for better margins. Does this sound like you?

 

Then maybe you need to secure investment in your business to take it to that next level. Different industries can benefit from different kinds of investors and investment. Make sure to understand what makes the best sense for your business.

 

5 Increase Your Speed

 

Ensure you and your employees are working smart, not hard.

 

Delays at any point of your manufacturing and sales can increase costs and lower profit margins. If your inventory is moving slowly, you need to increase storage costs, which increases the risk of spoilage and unsold items.

 

Reassess your work tools and processes on a quarterly basis. Buying new equipment or finding ways for optimisation can help your employees work faster and boost productivity, and reduce labour costs.

 

Ready for better profits? Contact Equity Alliance today.

 

The nature of your business might mean that exponential growth is your only option for better margins. Does this sound like you?

 

Then maybe you need to secure investment in your business to take it to that next level. Different industries can benefit from different kinds of investors and investment. Make sure to understand what makes the best sense for your business.

 

5 Increase Your Speed

 

Ensure you and your employees are working smart, not hard.

 

Delays at any point of your manufacturing and sales can increase costs and lower profit margins. If your inventory is moving slowly, you need to increase storage costs, which increases the risk of spoilage and unsold items.

 

Reassess your work tools and processes on a quarterly basis. Buying new equipment or finding ways for optimisation can help your employees work faster and boost productivity, and reduce labour costs.

 

Ready for better profits? Contact Equity Alliance today.

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