In this second follow up post ill discuss some tips and strategies to immediately make your business more profitable.
I received a lot of emails regarding profitability and how to get it right.
When you run a profit and loss statement, up the top is Sales, then purchases and this gives you your Gross profit. It may be tempting to increase profit by reducing the cost of products you buy to sell or ingredients you buy to make the product you sell.
But these cost reductions are typically hard to come by especially if you're not buying huge volumes. I suggest you look at what you buy and as long as you don't feel your getting ripped off, then the price is the price. Even if you do get a lower price it may only be 1-5%. Plus it will put a bad taste in your supplier's mouth. And you don't want lower quality products which may also be tempting but this will just cheapen your offer.
A much more effective way is to look at all your spending below gross profit, your overheads.
Every £ saved here goes straight to Profit. Some of the easiest savings I had were:
- Software subscriptions - Go through every monthly payment, can you consolidate some of these subscriptions. Is there a free version?
- Bank charges - Go to 2 other banks and say id like to speak to someone about opening a business account. Get a list of their charges and compare them to what you're paying now. And change if lower. It's your money!
- Courier Costs - It's a competitive market, get several quotes and go with the cheapest. Even Apple and John Lewis use Yodel!
Aim to save 10-20% on overhead costs. That means you come potentially become 20% more profitable!