10 Tips To Improve Margins
- 1. Assess monthly income and expenses. Compare figures with previous months and with targets set in your business plan. Is spending increasing or is income decreasing? Set new targets if necessary.
- 2. Do a full audit of expenses. Include everything from wages and overtime to supplier costs, utility bills, insurance payments, fuel expenditure etc. Highlight areas you think you can make cutbacks without having an adverse effect on your business. Be realistic - don't expect to reduce costs across the board.
- 3. Look closely at the waste your business generates. Encourage all of your staff to use your firm's resources as efficiently as possible.
- 4. Try to negotiate better deals from existing suppliers. If cashflow permits ask for discount for early settlement of invoices.
- 5. No matter how good your relationships with your current suppliers, consider trying to get improved prices from new suppliers - providing you're sure you'll receive the same quality products or services.
- 6. Consider buying in bulk to save money. Agreeing long-term supply contracts or minimum annual purchase volumes in return for lower prices could be another cost-saving strategy, but make sure this will not overstretch your finances or leave you over-stocked.
- 7. Review your product range and business focus? If you don't think you can attract more customers with your existing offerings, maybe you should consider adding to your portfolio. Consider rationalising your range if some products are not popular.
- 8. Review prices regularly. You need to know how much your competitors charge, what level of service they provide, and how much customers are willing to pay. Look for premium pricing for premium service.
- 9. Focus efforts on high-value customers and minimise the time you devote to those that spend the least or take up more time than they are worth.
- 10. If you employ sales staff, take a look at their targets. You could consider improving their bonus, commission payments and other incentives, too.
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