- Posted by vividano
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Any successful business owner will tell you that the key indicator of the health of a business is its profit trend. Sales trend, customer retention, leadership etc are all priorities of course – but of secondary importance.
Profit is the component which keeps a business free to make its own choices. Where and when to invest next, the ability to recruit, acquire or launch new enterprises all flow from profit. So how do you ensure your business benefits from a positive profit trend?
There are many approaches, some of which will suit certain types of enterprise more than others, but some are common to most business endeavours. For example, pricing. The simplest and most effective route to improved bottom line performance is through increased price. This is hardly rocket science, but the inclination to even consider raising prices is too much for some owner managers and directors. And that’s a pity because in many situations it is rational and achievable thing to do. What’s required is sound judgement based on market analysis, and creativity. For example, “Bundling” is a technique many companies use to increase price while improving perceived value for money. It’s a creative route to increased profit.
Secondly, do you regularly review your supply chain arrangements to reduce incoming costs? There are many ways of achieving this, one of which is through supply chain sharing. Eminently do-able – as long as it is done the right way.
And what about reducing waste? Think about your staff resources and ask yourself “are we using our time efficiently?” Reducing time spent in meetings when that resource would be better spent delivering its job goals would be a useful step towards greater productivity. And improved productivity is another route to profitability.
So really the path to profit needn’t be that hard.
Tony Wightman is Director of Wellwood Consulting, the business and marketing consultancy serving SMEs in London, Suffolk and Essex