1) Have a clear business plan
According to Real Business – SME’s with a clear business plan are one fifth more likely to increase profit margins.
A business plan helps identify the objectives to increase profit, and joins up the dots between sales, HR and finance providing an analysis of a company as well as its market place.
2) Know your products and customers inside out
Are you getting the most out of your products and services? Can you upsell to current customers? By knowing both in complete detail you will be able to establish if there are opportunities to use your current product and client base to increase profitability.
3) Have a business development strategy
Some people are better at business development than others and will have the natural ability to sell. Decide who within your company is naturally suited to networking and selling your products and services to new potential customers. Have a target list of those key companies you really want to attract and set clear targets for those involved in the business development strategy.
4) Look at outsourcing roles
Consider outsourcing specialised tasks or hire part-timers for roles that are not busy. Even saving a few thousand per month can make a big difference to your business. In addition to ensure you get the best qualified people many senior and more specialised roles like a financial director or marketing director will work for themselves and will outsource their services part time, which is a great option for SME’s.
5) Upsell to current clients.
Are there any additional services that you can offer? Services that you can upsell to current clients may be a simpler way to increase your profits.
6) Recruit the right team
Ensure you have the right team in place who are all working towards building profitability in your business. Partner with a recruitment company who understands what you are trying to achieve.
7) Get the most out of your people
Don’t forget to make the most of the staff you already have – investing in building their leadership and management skills could really help move your business forward. Foster entrepreneurship to encourage your employees to offer more ideas and think outside the box.
8) Engage a specialist to review your costs
There are many specialist companies that will work with you to reduce elements of your cost base. These often work on a contingency basis, recouping their fees from the savings that are generated. Costs that are often looked at first are utility costs, however other areas that often present opportunities for savings include rates, transportation and insurance costs.
9) Reduce waste
Waste is present in most businesses and nearly always presents an opportunity for reduction. Waste can exist in a variety of forms; unproductive time, duplication of resources, scrap, paying too much for supplies, redundant processes etc. Take a good look at the way you work and identify a handful of areas to target. Involve a team to get buy in, set targets and publicise the results around your company. It may become contagious.
10) Focus on your working capital
Ensure that you are optimizing the use of your working capital by ensuring that your customers pay in a timely fashion and ensure that you are not carrying too much stock. Ensure you agree sensible payment terms with your suppliers. If your working capital is too high, your cash reserves will be affected and your financing costs increase.