7 Tips to Maximize Profitability in Your Business
When you own a small business, maximizing profitability is essential. Every dollar counts when your business is starting out, so taking steps to ensure you are profiting as much as possible can make or break your business. Here are some ways to maximize profitability.
Determine What Adds Value, and What Wastes Resources
Carefully analyzing your business in detail can help you see trends and patterns that show what areas you are succeeding in, and what areas need some attention. If you do an analysis of your business and find that there are areas that are not profitable for you, or are cutting into your profit, you can turn your focus back to the value added areas of your business.
If you are working with the same pricing scale you’ve been using, yet your services or methods have changed, it’s time to take a close look and reevaluate. If you have overlooked expenses associated with providing your service to your customers, you could be losing money. Likewise, if projects or jobs are budgeted for an allotted amount of time but are taking significantly longer, pricing needs to be updated.
Analyze Any New Ventures Thoroughly
If you are considering adding services to your business, or taking on a new and different project or client, it is imperative to run that prospect through a detailed financial analysis. There could be hidden costs down the road that you aren’t considering in the short term that could greatly impact your business. Likewise, if you are looking into potential investments for your business, it is wise to consider any complications down the road, as well as the viability of the investment long term.
Speak with Sales Associates About Pricing
If your business has a sales department, speak directly with your sales representatives to get an idea of how customers receive your proposed prices. Do customers hesitate or argue about prices? Are they quick to agree to a proposed price? By speaking with your sales associates, you can better judge if your prices are due for an increase, or if you are asking too much of your customers compared to others in your field of business.
Make Sure You Aren’t Overpaying for Services
One fairly simple way to cut costs in your business is to price shop for your necessary utilities. Just as your customers price shop for the best value, you should be looking for the best value in your business’ expenses. This could be as simple as speaking with your internet and/or phone provider, or as complex as looking into different office spaces for your company. When every penny counts, don’t waste money when there are better options available to you.
If your business is in need of some financial counsel, give The CFO Source a call today. Our team will help you break down your business expenses so you have a clear picture of what areas need improvement.