Business profits can, broadly speaking, only be increased by sell more and reduce costs.
Many years ago a millionaire and inspirational speaker called John Fenton wrote a book called “How to Double your Profits”. In it he suggested twenty areas of a business where the directors could take action to either increase sales or reduce costs, the cumulative effect being to double profit.
Do the sums; if you can find twenty things that you can improve in a small way then by getting an average 3.5% improvement in each and the result is double profit.
So here are some suggestions as to how you could increase your business profits. Just how hard would it be to:
Sell 3.5% more of your current products or services to existing customers
Increase your customer database by 3.5%
Reduce your material costs by 3.5%
Reduce your wage bill by 3.5%
Increase your selling prices by 3.5%
Reduce your indirect costs by 3.5%
Get your sales people to make 3.5% more calls per month
OK it’s a theoretical exercise. But achieving those 7 improvements would increase your business profits by 23%. And the list goes on.
Not easy in the current economic climate, but all the more reason to set your mind to it. In the past I managed to achieve better than 20% per annum increase in business profits during a recession by using just that kind of approach.
Sometimes you have to think outside the box but if you’re not increasing your business profits and improving cash flow your business is going backwards.
