Dear Aunty B,
My latest BAS just cleaned me out, and some cash flow projections indicate I am going to spend yet another profitless year working for the Man. Yet I honestly can’t think of a single thing I can do and I really want to start making regular profits.
My 15 staff are all efficient and hard working. I am doing a great job (of course). Should I bring in a consultant?
You know something? You are probably doing a great job – supplying jobs for your mates and keeping some more blokes employed at the tax office offshoot in Mumbai.
Good on you for deciding to change.
The bad news – there is no one silver bullet.
Instead there are lots of little tasks. But it’s worth the effort. It’s like selling your house. You set yourself a range of jobs, clean it up, get repairs done and sit back thinking ‘why didn’t I do this before?’ Someone else is going to enjoy all the upside.
Ditto the business. In fact, imagine you have decided to sell the business. You would take a two step approach: immediately implementing some simple ideas to boost profit and working on longer term business improvements.
Long term business improvements should focus on getting in more revenue, less costs and a better-run business.
But quick fix ideas can be implemented now. Here are 50 ways to boost profit. Decide to do 10 by the end of this year.
- Raise your prices. You’ll be surprised how few complaints you’ll get about a 5% price increase.
- Sack a customer. Think about abandoning demanding customers who eat up too much time for too little reward.
- Drop a product from your range. Most companies carry products or services that are just not working or cost too much to produce.
- Change your bank. There’s plenty of big and small financial institutions out there, so shop around for the best deal.
- Put your printed materials online. Posting documents such as manuals and brochures on your website saves on printing, storage and postage.
- Change suppliers. China, India, Vietnam and Thailand are full of companies that can supply products cheaper than in Australia. If you can’t beat the importers, join them.
- Put lots of information on your website. This will help reduce the amount of time you spend on the phone answering customer queries.
- Bill customers promptly. Get your invoices out as quickly as possible to get them back faster.
- Create incentives for creditors to pay faster. Offer a small discount to clients prepared to pay within a week and your cash flow will improve.
- Weed out slow payers. Before taking on a major customer, check their credit worthiness and references. Bad debts are bad news.
- Use email. Cut postage costs by migrating customers to email.
- Cut your inventory. Don’t tie money in the warehouse. Get that money out there working for you. Or better still, get it back in your wallet.
- Consider different property options. Moving out of the city can save you a bundle on rent.
- Barter. Look for companies with which you can exchange goods and services. It keeps cash in your pocket and helps you network at the same time.
- Add a new product or service to your range. Then bundle the new product or service with your new offering and watch revenue grow.
- Pay your bills online. It saves on cheque fees and postage costs.
- Consolidate your loans. Multiple loans mean multiple sets of fees. Consolidate and save.
- Change your phone company. Communications – particularly mobile phones and internet – can be expensive. Review your supplier and don’t sign a contract longer than 12 months unless you’re sure prices aren’t going to fall.
- Do things out of season. Conference facilities, hotels and airline flights are cheaper at certain times of the year. Plan around this and save.
- Negotiate. It makes some people uncomfortable, but haggling is a perfectly normal part of doing business.
- Shop around. You can find a cheaper price for everything if you look around. The bigger the expense, the more shopping you need to do.
- Advertise online. Online advertising is relatively cheap and its effectiveness is much easier to measure.
- Check your invoices. Don’t just pay up blindly – make sure none of your suppliers are over-charging you.
- Take advantage of discounts. You love prompt payers and so do your suppliers – take advantage when companies offer discounts to customers that pay quickly.
- Recycle. Reuse marketing materials such as promotional signage and displays.
- Find a purchasing partner. There are some things every business needs, like stationary and cleaning products. Team up with another business and use your combined buying power to get discounts.
- Standardise and simplify. Big manufacturers try to standardise every process in their business so it is done right every time. Less mistakes means less wastage.
- Clean up. Tidy your work environment so staff waste less time dodging obstacles and finding lost files and spend more time attending to customers.
- Survey your clients. Find out what they like about you and what they don’t like. Decide where you should invest your time and energy.
- Cut your labour costs. People are typically a business’s biggest expense. Weed out underperforming or unnecessary staff.
- Outsource. In some industries such as manufacturing, outsourcing production of some products or components can save big dollars.
- Form a joint venture. Many companies are too small to compete for large contracts. Find businesses with complimentary products or services and bid together.
- Make an acquisition. Buying another company is a quick way to grow revenue. The key is managing the integration.
- Go global. Australia is a relatively small market and taking your business offshore can open huge sales opportunities. There are even government grants available to help with the costs.
- Buy second-hand furniture and fittings. A slick office never made anybody any money. Keep it neat, tidy, functional and cheap.
- Do some R&D. Research and development can be expensive but new products don’t make themselves. Take a punt and trial something new.
- Copy. So what if you didn’t have that great idea first? If you see something that works, incorporate it into your business.
- Be extra nice to your customers. The cheapest and most reliable form of advertising is word-of-mouth.
- Say no. Some jobs are marginally profitable or high risk – don’t be afraid to avoid them.
- Go upmarket. Customers are prepared to pay for high-quality products. Make sure you are seen as the premium alternative and price products to reinforce this.
- Steal top staff from a competitor. Luring a proven employee with a big salary may end up being cheaper and less risky than hiring and training new staff.
- Improve your reporting systems. Knowing how each department and sales person is performing on a weekly basis helps highlight your strengths and weaknesses.
- Focus. Work out exactly what your business is good at and concentrate on it. If you stop trying to be all things to all people, you’ll improve your competitive advantage.
- Cut out the middle man. See if you can source products directly from the manufacturer at below wholesale prices.
- Extend your trading hours. Staying open a bit longer can be a good way for retailers to bring in extra revenue.
- Examine your logistics. Big companies regularly restructure their supply chains to improve profitability. Look at your transportation arrangements and eliminate double handling and delays.
- Benchmark your business. Compare your departments to each other. Compare your business to competitors. Compare your company to those in other industries. Then decide what sort of returns you should be getting and make a plan to get there.
- Develop and maintain your customer database. Selling to your existing clients is far cheaper than trying to find new ones. A good database is a big asset you must exploit. Make sure you have the latest customer relationship management systems.
- Change electricity suppliers. Energy companies are targeting small and medium businesses so take advantage and get a better deal.
- Monitor and manage staff workflow. If employees are getting through their work quickly, assign them new or extra tasks. You may even find you’ve got more staff than you need. On the other hand by resourcing properly you can make existing staff more productive.
Your Aunty B.