As a business owner, your profits are your reward for all your hard work and are the only accurate measurement of your success. Profits stimulate growth, support the business owner, provide for the wellbeing of staff and determine the success or failure of a business.
We’ve highlighted below some top tips on how you can increase your profits.
Tip 1 – Gross Profit
The objective of a business owner is to increase sales income while controlling direct costs, or reduce direct costs to increase gross profit.
To achieve this, you need to ensure that:-
- you know your market and competitors;
- you provide good service, delivered on time and to specification;
- you have complete product knowledge and you are technically able in all parts of the business;
- you take advantage of cost-effective ways to increase sales;
- your direct costs are kept to a minimum – business owners should keep control of direct costs by constantly reviewing material and labour expenses as well as production methods.
Tip 2 – Overheads
As a business owner, you need to aim to keep the following costs under your control:-
Expenses – aim to keep your business expenses to a minimum and ensure that any additional overheads result in increased profitability.
Direct costs – ensure you research and review the market to establish where to place orders.
Acquiring assets on finance – obtain quotations for finance from your suppliers, your bank and a finance company. However, it is always sensible to seek advice from your accountant to see if these costs can be reduced.
Credit – closely monitor your credit account customers to avoid bad debts.
Regularly review your costs relating to telephone, insurance and utilities – even review your bank charges.
Tip 3 – Income and Expenditure
It is important to be aware of your income and expenditure. Keeping your books up-to-date is essential for knowing exactly where you are financially in your business.
A cost-effective way of reducing overheads and keeping on top of your income and expenditure is to outsource your bookkeeping. By doing this, you can ensure your records are accurate using the latest technology, resulting in a complete set of accounts at the end of the financial period – read our blog: 5 Good Reasons to Outsource Your Bookkeeping.
In Summary
We can help you with your business planning and advise you on the best way to increase profits.
For help or advice, please do not hesitate to contact the team on 0161 761 5231 or email theteam@horsfield-smith.co.uk.
