SIMPLE RULES FOR MAKING YOUR BUSINESS PROFITABLE

SIMPLE RULES FOR MAKING YOUR BUSINESS PROFITABLE

A business must make profit to be meaningfulto the owner or owners and other stakeholders, and to continue to survive.

Advice on making an enterprise profitable could be given under two main headings:

  1.    Keeping Costs Minimal.

-         Drop products that always make losses.

-         Do not increase your staff unless it cannot be avoided. Remember, it is easier to avoid employing than to send employees home (declaring them redundant).

-         Introduce a performance-based salary rise system if you do not already have it.

-         Get better deals from suppliers, buyers and intermediaries (supporters of the business environment such as insurance companies, brokers, consultants and bankers).

-         Use home space instead of renting dedicated offices. If you have to go the lease way, ensure there is no space in the offices or yard that you do not immediately need. The property owner takes every square inch into consideration when fixing how much you have to pay.

-         Deal in products that allow a bigger profit margin, or sell fast.  

-         Improve efficiency. That is, producing more with less, or more with the same amount of investment.  

-         Look around you some more, and see if there are other unnecessary costs your business is bearing: limit office decorations to what just makes it a pleasant place to operate in; can the business support a vehicle with the engine sizes you have in your fleet?

  2.    Increasing Sales.

-         Improve your offer. This is sometimes a short term cost but long-term gain. Areas of improvement are diverse and depend on the product type. In the case of a bathing soap, for example, spheres of attention could include shape, scent and size.   

-         Widen product range. This gives you more sources of profit.

-         Capture new customers. Yes, it does mean more sources of purchases – another way of saying more profit.

  3.   Increasing Price.

Perhaps the most direct and obvious avenue of making a business more gainful is increasing product price. It has, however, to take into account issues like competitor pricing and ability of the market to pay.

Conclusion

There are also steps of a more strategic nature that businesses, mainly large ones, do, to make their operations more lucrative. Among these are acquiring of powerful suppliers or customers who can easily drive up costs by dictating terms. This gives the acquirer more control over prices at which they buy inputs and the prices at which they sell their finished products, as well as on other contract elements.