INCREASE PROFIT

Profits are the lifeblood of a business and are a reliable measurement of success. So, how do you increase them?

Gross Profit

To increase gross profit you can either:

1.  Expand sales while controlling direct costs.

Consider promotions, advertising, press release, etc. Be very cautious of dropping prices to boost sales.

2.  Reduce direct costs to increase gross profit

When trying to reduce direct costs shop around for competitive prices.  However consider other factors such as quality of materials, delivery lead times, payment terms, as well as labour costs, production methods i.e are you carrying out a particular job in a certain way merely because thats the way you’ve always done it?

Overheads

It is good practice to review your overheads regularly as they can quickly become overwhelming.           

• Ensure that any  expenditure incurred benefits the company, whether it be increased profits and/or efficiency.
• Utilities - such as electricity, phone bills. Compare prices with other providers.
• Insurance premiums.  What can you do to reduce your premiums?  I was able to reduce my employer’s vehicle insurance premiums by £000’s by implementing changes such as the introduction of driver handbooks and accident camera kits into all vehicles, driver training, etc. 
• Bank charges – ensure that you have a good grasp on of your cash flow so as not to exceed your overdraft and hence receive an admin charge from your bank. Ever thought about paying suppliers by bank transfer? It is both cheaper and faster than writing cheques.
• Bad debts – try to avoid these by ensuring that your customers pay on time.

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