Top 3 Tips for increasing your business profit
Beany has released its top 3 tips for increasing sales so let’s look at the other side of the equation – the top 3 tips for decreasing your expenses so you can make more money.
There is so much software out there now to help you be more productive so invest some time looking for technology solutions. Think about the parts of your business that take up your time and which don’t lead directly to income such as chasing debtors, sending out invoices, recording your time, clearing emails or marketing to new customers.
Even if you think you’re a technophobe, give this a go:
- Identify the task that you hate the most in your business which takes up valuable time
- Work out how much time you usually spend on this task and write down what you need to achieve.
Chasing debtors (I don’t know anyone who enjoys this). This takes 2 hours per month, bad debts put your business under cash flow pressure and you end up with a chore that you put off. You want a painless debtor collection system.
- Google debtor collection software and see what pops up as a solution. Budget to spend one hour researching all the options – often you can have a free trial to see if it works for you.
- Implement the change.
- Feel smug that you’ve found a tech solution that takes a headache away and brings more money into the business.
Review 3 expense codes in your business
Often cost just starts to add up in your business. You’re busy in your business and not watching every payment or invoice and several things can happen:
- You keep paying smaller accounts, even though you know they are not providing any great service for you, but it takes too much energy to review and cancel smaller amounts.
- You’re paying too much for some goods and services because you feel loyal to a supplier, or it’s takes too much energy to review.
- Better solutions have come along but inertia is keeping you with the same old solution.
So pick a rainy day and if you’re good with your accounts, pick any 3 expense codes and look at all the transactions for one quarter. If you don’t feel confident about finding this information, there are two opportunities here. First, ask someone to teach you where to find the information and then second, look through all the transactions.
- Make notes as you go about any improvements that you can see (I guarantee you will find something!)
- Budget some time to make the changes
- Do it!
Cut your wages bill
This is not an invitation to fire people or cut wages for individuals! Many businesses are constrained by how many good people they can find. This is a tip around using the good ones you have to better effect.
Inefficiencies can creep into businesses, even with the best people. We get comfortable doing the same processes and then it becomes hard to change them.
This is all about creating more productive systems for your good people to work in:
Spend time with your key people, talking about where they spend the most time, what frustrates them and if they have any suggestions for change. Usually the people doing the work have the best idea about how to improve things.
Write down the changes they have suggested and review them – do they make sense to you?
If the answer is yes, empower change in your team. Let the person who suggested a change, lead it, with your support.
Set a target for improvement, say 5% less time on a task.
Make sure you have some way of measuring the improvement so that you (and your team) know when it’s achieved.
Celebrate with morning tea and after work drinks and thank whoever came up with the great idea! Hopefully this will encourage others to come up with their own great ideas.
In Beany, we used to have a tax summary and a management letter to our clients. Both documents took quite a bit of time to prepare and upload. We had always done two documents so we kept doing it until a new team member said “Why don’t we include the tax payments information in the management letter?” Seemed rather obvious when someone pointed it out! So we amalgamated the two documents and saved 20 minutes per job.
Beany loves helping our clients make more money so if you have a great tip, share it with us and we’ll pass it on! Contact firstname.lastname@example.org if you want to share tips or get more information from Beany on any of the above.