Are you leaking money due to inefficient systems and shrinking margins? If so, this could be a good read for you as I discuss how to avoid that trap.
I want to introduce you to a concept that will significantly impact your business’s profitability (without spending an extra penny):
INCREASING YOUR MARGINS.
Here are some powerful ways to do just this…
- Take a Premium Price Position. Many businesses are afraid of losing customers, so they discount their products and services. But did you know that this is actually one of the least effective ways to position your company?
There are limits, of course, but most businesses can easily afford to increase their prices to improve the bottom line dramatically. Here’s a great chart showing the kind of impact even small price increases can have on your overall profitability (yes, even if you lose a handful of customers in the process):
Source: Australian Business Toolkit
2. Negotiate Lower Prices from Manufacturers and Suppliers. Negotiating lower product costs from manufacturers and suppliers is often as easy as asking. You’ll be amazed at the results you can get using this simple question: “Is that the best you can do?”
3. Implement a “Lean Manufacturing” Plan. Lean manufacturing isn’t about cutting corners — it’s about improving efficiency and quality! You do it by eliminating waste in the form of over-production, excessive defects, too much movement (both on the production floor and in transportation), and unnecessary processing. This is a complex but vitally important component of all successful businesses — so be sure to look at how you can make adjustments in your company. (And no… this isn’t just for manufacturers of tangible products: you can apply these principles for dramatic improvements in just about any industry!)
4. Stop Stocking Inventory That Doesn’t Move. One of the fastest ways to lose money is by spending it on inventory that doesn’t sell! My rule of thumb is to keep stock for no more than 45-60 days in advance.
5. Watch Inventory Shrinkage. Unfortunately, employees aren’t always ethical, so keep a close eye on your inventory. Sometimes they are your most long-term employees. Have systems and policies in place to prevent employee theft.
TAKE ACTION NOW: Identify at least three areas of improvement in shrinking margins. Remember that one of the simplest and fastest ways to address this issue is to increase your prices — so I strongly recommend you consider this strategy first and foremost.
Then, some of these strategies will probably require a bit more assistance to implement properly.
Money challenges are solvable!
Business challenges around money can be disheartening (“we’ve been working so hard, and this is all we have to show for it???”) and sometimes frightening (“oh no! we might not make payroll this week!!!”)
The good news is that money challenges have solutions.
I’ve helped many clients turn around their financial situation – often quite quickly – through a better understanding of financials, better pricing, and improved sales and marketing.
If you’d like some support to resolve money challenges in your business, I invite you to book a 15-minute call to discuss business coaching.
You can book a complimentary 15-minute call with me at timewithshane.com.