Am I ready to increase profits?

The first stage in looking at how to increase profits is to analyse how your business works from a financial point of view. Here are some questions that need to be answered.

Am I running more than one type of business? Find out if part of your business is subsidising other parts. Must I run both businesses or can I do without one?

Am I selling some products at a low gross margin? Do I have to sell them? (For those new to business Gross margin is the difference between the selling price of products and the amount you buy them in.)

Can I increase prices? What are my competitors charging?

Am I employing too many staff? Analyse what each member of staff are doing. Nobody likes getting rid of staff but you do not owe the world a living.

Look at your overheads and see if you can reduce them. Overheads generally fall into two types. There
are fixed overheads which you cannot alter much like rent. Then there are variable overheads which alter in line with sales. The first type is hard to make any reductions with but the second type is a more likely area to look at.

So, all this has been about trimming the business down. Now let’s look at making the business grow.

How do I do this? Do I need to advertise more? What about leafletting? Do I need to spruce up my website?

Can you set a target for growth which is attainable? Don’t be over-ambitious.
Then prepare a budget which includes your old business as trimmed down plus what you think you can add to your business. It can sometimes help if you prepare budgets showing what would happen at different levels of activity. You will need to consider what effect growth will have on costs. Will you need to take on staff to cope with the extra activity? Can you grow inside your existing premises?

If you are in business with other people, do you all have the same vision about where you want to go?

Don’t worry if your business plans do not work out as you hoped. It pays to be flexible. You learn from your mistakes unless you keep repeating them.

We would be very happy to look at your Business Plan or help you create it. It often helps to have an outsider’s input.