Contrary to what a lot of small business owners believe, increasing profits doesn’t have to require monumental changes, like taking on more salespeople, making big investments or market expansion. In many instances, it’s the smaller, seemingly inconsequential changes to the way in which a business operates, that delivers the biggest shift in profits.
Here are 13 small changes that with guidance from Miami accountants, you can put into practice to make your business more profitable:
- Raise your prices
A modest increase in price of between 5 and 10% shouldn’t see you lose a significant number of customers, but can have a dramatic impact on your profit margins.
2. Weed out anything that isn’t helping your profits
Awkward customers that take time to pay, harangue you for discounts, and generally require a lot of hand-holding, could be costing you more than you realize. Some customers or services inhibit overall profitability once all costs are accounted for; weed them out and start building your profits.
3. Make upfront deposits mandatory
Requiring a deposit upfront for everything you offer can give cashflow a boost, while directly enhancing profitability.
4. Make same or next-day invoicing standard
Delayed invoices mean payments are also delayed, often resulting in thousands of dollars tied up in receivables. By making same or next-day invoicing standard, you can get paid quicker and enjoy a healthier flow of cash.
5. Be consistent with estimates
Standardizing the processes they use for estimates, businesses can enjoy margins that are more consistent, instead of profitability that’s hard to predict due to inconsistencies.
6. Track rework systematically
Analyzing the root cause of rework and systematically tracking it can enable you to quantify the problems, and spot patterns so they don’t destroy your profits.
7. Negotiate with vendors
Not negotiating with vendors could be having a significant impact on both your cashflow, and your profitability. Even just asking for better terms can enhance working capital and reduce needs for financing.
8. Enhance operational efficiency
Small improvements to operational processes or administrative tasks like expenses tracking and payroll, can reduce the cost of overheads without making any sacrifices in quality or capability.
9. Focus your marketing
Marketing spread across a range of channels is a classic small business strategy, but without knowing which ones are generating the best return, the budget could easily be squandered. By tracking customers and where they’re coming from, however, small changes can be made to marketing allocation that can have a dramatic impact on profitability.
10. Make collections structured
Putting a structured collections process into place, that might include such things as friendly follow-up calls after a due date and automated payment reminders, can really help cashflow without harming customer relations.
11. Put a program for preventative maintenance in place
Prevent mechanical breakdowns that often see operations grind to a halt, by scheduling regular preventative maintenance. It is almost always something worth investing in for businesses seeking to enhance and protect their profits.
12. Employee cross-training
By cross-training your employees so that they’re competent in a number of different roles, you can say goodbye to any non-productive down time.
13. Carry out quarterly reviews of pricing
Setting prices and not changing them – even when those costs change all the time – can create a chasm between your costs and your prices, that over time, eats into your profits.
Quarterly price reviews doesn’t mean that you have to constantly increase your prices, it simply gives an accounting firm in Miami the opportunity to evaluate your existing pricing in terms of margins and cost structures.
If your business isn’t generating the kind of profits you want or need, consider trying some of these small changes; you’ve got nothing to lose, and everything to gain.