In an uncertain economy, where every naira counts, even the smallest increase in revenue or reduction in expenses can have an impact on company profitability. The good news is that a large-scale company overhaul isn’t necessary. It’s often simple, common sense steps that improve the bottom line, especially for a small business. Mid-year is a good time to step back and look carefully at your business practices. What are we doing well? And what can we improve?
Lower financial expenditures
Look at your insurance policies and financial accounts for places to save money. Save money on insurance by comparing providers for the most competitive rate; then ask your current lender or insurance provider to match that rate and consolidate insurance policies or bank accounts if possible. Importantly, don’t take on unnecessary debt. Do a thorough cost-benefit analysis and future forecasting when considering business expansion. Consider the opportunity costs and the effect of debt payments on cash flow. Excess debt affects company rating, interest rates and the ability to borrow in the future.
Modernize your marketing efforts
Of course, you don’t want to eliminate paid advertising that is working; however, it can be worthwhile to take a look at some cheaper alternatives. For example, you can build your customer e-mail list and implement a referral program. A recommendation from a current customer is far more likely to result in a sale than traditional marketing. Network more, advertise less. Clients are more likely to hire a business with a face they recognizeHarness virtual technology.
Reduce supply expenses
Save money on office supplies by contacting vendors to let them know you’re price shopping. Look outside your pool of traditional vendors and patronise Large discount suppliers that can often beat traditional office supply vendor prices.
Narrow your focus
As a small business owner, try to narrow your business focus to be one of the most effective strategies for improving your bottom line. By limiting the types of services you offer and the projects you accept, you will be more productive and produce higher-quality work. Another way to narrow your business focus is to subcontract. Rather than turn away business, maximize your capacity by subcontracting pieces whenever possible. More projects equal more revenue, while subcontracting equals lower expenses. The result is a better bottom line.
Make the most of your space
Analyze your current use of physical space. Overflowing storage, too many supplies, piles of paper files and inefficient placement of furniture and equipment are common space wasters. Consolidate or centralize the different functions or departments of your business. Use space for dual purposes. A meeting room that doubles as a break room or a storage room that holds copy and fax machines for example. The opportunities will vary depending upon the nature of your business.
Maximize your employees’ skills
Assess the current usage of employee experience and skills. Give responsibilities to the employees with the most skill and efficiency in those areas. Don’t use expert salespeople for word processing or “numbers” people for design functions. It’s often necessary for one person to be responsible for a variety of tasks, but consider exchanging some of those tasks with another individual who shows greater efficiency.
Cut production costs
As a business owner, you’re always looking for ways to cut material costs and optimize your resources. Here are a few suggestions: try selling leftover cardboard, paper and metal instead of sending it to the recycling centre. Also, consider ways to use your waste to create another product. Make sure you’re getting the most out of your production real estate. Centralize or consolidate the space necessary for production. Lease unused space to another business or individual—it can be as small as an office or as big as a warehouse space.
Focus on quality
Quality sells whether in the form of products or services. Satisfied customers increase sales through referrals and repeat purchases. Higher quality and a solid reputation allow you to charge higher prices, which equals higher revenue and a healthier bottom line.
