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Increase your margins

Minor changes can boost your profits

When faced with the bigger issues concerned with running your firm, it can be easy to neglect the little things. However, a leaner, more profitable business can result from making a few simple adjustments to even the most minor areas of your operation. So, what measures should you consider?

Assess your monthly income and expenditure. Compare figures with previous months, as well as targets set out within your business plan. This will tell you whether your spending is increasing or whether income is decreasing, enabling you to set targets for the margin-boosting measures you introduce.

Complete a full audit of your outgoings. Include everything from wages (including overtime) and supplier costs to utility bills, insurance payments, fuel expenditure etc. Highlight areas where you think you can make cutbacks without these having an adverse effect on your business. Be realistic - don't expect to reduce costs across the board.

A lot will depend on your type of business, but take a closer look at the amount of waste your business generates. Many firms make considerable savings by taking simple steps to reduce waste. Encourage all of your staff to use your firm's resources as efficiently as possible.

Try to negotiate better deals from your existing suppliers. Inertia on your part can lead to your paying over the odds. In addition, ask whether they will grant reductions for your early payment.

No matter how good your relationships with your current suppliers, don't rule out trying to get improved prices from new suppliers - providing you're sure you'll receive the same quality products or services.

Consider whether buying in bulk could save you money. Agreeing long-term supply contracts or minimum annual purchase volumes in return for lower prices could be another cost-saving strategy, but you need to make sure this will not overstretch your finances or leave you holding supplies you don't need.

Is it time you reconsidered your product range? If you don't think you can attract more customers with your existing offer, maybe you should consider adding to your portfolio.

Review your prices regularly. As well as identifying increases in your own costs, you need to keep up to speed with how much your competitors charge as well as how much customers are willing to pay. If you are confident it will not affect sales volume, you should always keep your prices as high as you can.

Focus your efforts on high-value customers and minimise the time you devote to those that spend the least or take up more time than they are worth.

If you employ sales staff, maybe it's time to reconsider their targets. You could consider improving their bonus, commission payments and other incentives, too.

What next?

Our How To... guides can help you make sense of your financial data. Order or download them now.

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