There are many ways your business can increase profits and hopefully increase cash flow by doing so. As a collection agency that specializes in working with all types of business, we are always fielding questions from concerned business owners and others about their lack of cash flow and in many cases, lack of profits. It’s a question we get often.
How can I increase the profits in my business?
There are many ways to increase the profits in your business. Some are right in front of you and others need a little searching but if you’re committed and stick to a process and, get the proper resources, you’ll be on your way to increased profitability.
One clear way to increase your profits in your business is to reduce your overall costs. And as you might imagine, costs come in all shapes and sizes. You have general expenses in your business that are just part of being in business, payroll, taxes and your cost of any goods sold out of your business. Unless of course you are totally services based.
The first place many experts recommend is to look at your costs of the products you sell to your customers. Are you getting the best pricing from your distributor? Are there better ways to obtain better pricing and can you negotiate better terms? Speak with those you do business with such as your vendors and see what can be done to better your costs. You might even consider purchasing more of you can get better pricing.
We’ve talked about this before, but you should go through your expenses regularly. Costs that you incur on a regular basis can fluctuate without you even noticing it. Your insurance, electricity, and other monthly bills can go up or down, and you might not even see it. But checking these frequently can save you money. Who knows, you might see your electricity double and find out you have equipment that is draining your electric bill. That’s an easy fix if you spot it.
Have you ever stepped back and looked at your systems? Sure you feel that you have everything buttoned up and your saving time and money with your procedures. But could you improve? By stepping back and analyzing how things are done in your daily operations, you may just find better ways of getting your work done and fine ways to cuts down on duplication. Do so will save your money in the long run.
Look at ways to batch certain projects and tasks, outsource if you can to improve on workflow and save internal resources and look at the overall time it takes to meet certain goals in the business. Saving time saves you money and allows you to get to new business in a shorter period of time.
Outsource where needed.
We just mentioned outsourcing briefly and you may wonder how paying for something can increase your profits. It all depends on what you outsource and why.
One of the first things you should consider, as you might imagine we would recommend, is outsourcing your debt collections. And forget the shameless plug here for a moment, there is plenty of good reason for outsourcing your receivables to a collection agency.
Chasing down customers that have not paid you can be time consuming, stressful and quite frankly aggravating for many. You feel like you’re getting nowhere at times and the efforts are just not worth it. Outsourcing your collections has many benefits. First, it takes this uncomfortable task off your hands and allows you and your team to focus on building your business rather than chasing past due money.
It also employs professionals that resolve past due accounts daily with expertise. When you have trained professionals that know how to resolve delicate matters such as non-paying customers, having skilled people to do that is worth paying for and in the long run, will only increase your cash flow and your profits. When done tactfully and with display, you’ll also be able to keep more customers because they were treated well during the collection process.
Outsource your bookkeeping and accounting when necessary.
You’re the expert when it comes to your particular business and industry but bookkeepers and accountants know numbers and they can spot irregularities if they review them regularly.
If you are paying a long-time vendor a certain amount for various products or services and then that amount jumps drastically, your bookkeeper should be able to spot that. Maybe you were charged the wrong amount or someone on your team ordered something incorrectly. Whatever the reason, your bookkeeper should be able to spot that for you and find a way to correct that mistake. Mistakes in business equal profits and the lees that are made, the more profitable you’ll be.
Find new markets.
You may think you have your target market nailed down but you should always be looking for new industries to market to. While experts agree that it is great to have a niche, you can always be on the lookout for new customers that might need you. If you are a consulting firm, maybe there are industries where your expertise might transition nicely. If you are a lawncare company that focused on residential, maybe you should look to develop relationships with commercial property owners.
Always be looking for new opportunities.
If your profits and cash flow are suffering, and you want to chat with one of our experts, contact our team today and lets have a conversation about getting your business back on track.