Making a profit isn’t something that happens overnight – to create a good return from your business you need a clear focus and a well thought-out strategy for increasing profitability.
This means reviewing your business model and looking at every area of the business, to see where you can cut costs, increase margins and maximise revenue.
Focus on your key drivers
Having surplus cash at the end of the year allows you to invest back into the business, fund your growth plans and increase the size of your own dividends and drawings as the owner.
To achieve these profits, it’s important to focus on the key financial drivers in your business.
To drive profits:
- Boost sales – the more sales you make, the bigger your net revenue, so investing in marketing, sales activity and business development will be key to a better bottom line. The sales of something that a lot of people will be willing to pay a lot of money for.
- Increase prices – by setting a higher price point, and keeping your ‘cost of goods sold’ number low, you create a larger profit margin on each sale – upping your profitability. a lot of entrepreneurs find a way to price their product or service by looking at their competitors is charging, so they keep their prices low. If you want to run a profitable business, focus on creating high quality, high-value product you can charge a premium price on it.
- Cut costs – operational costs and overheads eat into your potential profits. So spend management and cost reduction are vital to creating a more profitable model. In another way, expenses are not bad if done it right, you need to spend money to make money. Business expenses are the investment that helps grow to your business. You have to plan your expenses strategically.
- Reduce taxes – tax liabilities will be one of your biggest costs, so sensible tax planning and use of tax reliefs will help to reduce your taxes and ramp up your end profit. Effective tax planning is something that you should be considered during the year and making it’s a priority can result in you paying less tax liability.
Talk to eFirm about boosting your profits
If your business goal is to increase profitability, we’ll help you review your business model, identify your key financial drivers and proactively drive your profit performance.
Get in touch with us and let’s start boosting your profits.