There are not many business owners we work with who don't have 'Increasing Profit' as one of their number one financial goals.
When it comes to increasing the potential for profit in a business a lot of business owners jump straight to the assumption that reducing their overheads is the answer.
While this is certainly one tactic you can take, it's generally not the one we advise first up. Firstly, let's take a look at the most common overheads in a business; staff and premise costs.
Below we look at some alternative solutions to increasing your profit around these areas by simply working a little bit smarter.
Yes, you can reduce the number of staff you have in a business to save on costs. However, if you need these staff to help you get a job done in a timely fashion, this will not be the answer. If you start overloading your remaining staff with extra work because you have cut back on other staff members, they are likely to become disgruntled and leave or simply become unproductive. This can lead to customer disappointment and or increased recruitment costs.
Instead, we recommend looking at your staff utilisation and / or your workflow processes. Are your staff being as efficient & productive with their time as they can be? Or are there some process improvements that you could implement to help them achieve more in a day.
Saving money by relocating your premises is something we often see our clients consider when they are reviewing their profit opportunities. However, we believe that there is more to consider than just cost in this decision. For example, if your business is paying a premium in rent because you are located in a street that experiences high traffic, this could be leading to certain proportion of your leads and sales.
At the very least it will be contributing to a high awareness of your brand. By moving your premises to a less visible location you risk losing that visibility and therefore a portion of sales.
In this circumstance, we would recommend gaining a thorough understanding of how your customers find you and weighing up the pros and cons and potential loss in revenue vs cost savings by relocating premises. We would also review alternative solutions such as subleasing some of your premise space to another business.
We love providing our clients with strategic and considered advice that helps them grow their business. If you would like to speak with one of our accountants about how we can grow your business, contact us today.