While not every company exists solely to turn a profit (profit should act as a byproduct of your business offering), without it, it’s very difficult to stay in business and impossible to grow. But profitability rarely happens without insight, strategy and a strong growth plan for your business.
These seven considerations will help you view your business through the lens of reliable profitability, and allow you to make the potential tweaks necessary to boost both growth and profit.
1. Understand your finances
Showing a profit starts by knowing what goes into showing a profit. It’s important to understand exactly what expenses you have to balance against your revenue. These include employee salaries, taxes, supplies, office costs and a number of other business-specific expenses. Once these have been accurately accounted for, you will have a realistic view of your profit.
Additionally, a good understanding of balance sheets, income statements and cash flow statements is essential to a full financial line of sight.
2. Create a business growth plan
Every successful business starts with a structured growth plan. Focusing on maximising profit from the outset is unrealistic and unsustainable. By constructing an overarching company vision, you can branch off into different and more granular scenarios that will enable business growth. Look at the things you can do more of - or less of - that will increase profitability and create opportunities.
Before actioning anything, set SMART goals (Specific, Measurable, Achievable, Realistic and Time limited). This will help you identify elements that are and aren’t working for you, and make the required adjustments to increase your profit over time.
3. Reduce costs wherever possible
It stands to reason that paying less for anything will leave a business with a higher profit margin. Almost every business will be able to implement some cost reduction, however minor, without affecting quality.
Key cost areas for businesses include:
Financials (such as insurance, bank rates and utilities)
You can further maximise cost-effectiveness by continuously reviewing your expenses. Ask yourself the following questions:
Where can I minimise wastage, either from suppliers or in the production process?
Are there any charges I can directly reduce or negotiate down?
Could any system improvements reduce costs?
Are there any hidden costs caused by tools or equipment that are incorrect for the job?
Do I have anything in surplus that I don’t currently need or use?
Is there anything I can put through the business to reduce or eliminate any personal costs such as a car?
4. Build an effective team
The growth plan for your business has to revolve around the right team. Hiring talented people, providing adequate training and resources, and motivating them in their roles will have a direct effect on revenue and profit.
An approach to consider when hiring is focusing on your strengths and hiring for your weaknesses. Use those areas where you naturally excel to provide leadership and training, and combat your weaknesses by hiring to fill those gaps.
For recruitment solutions to your business needs, look no further than the talent options provided in our business growth program.
5. Define your most profitable customers
Depending on your business, what constitutes a profitable customer may look quite different. But in most cases, there will be those standout customers who either:
Place regular (or bulk) orders
Pay your full asking price
Require little to low maintenance
Nurture and retain this customer base, and, if possible, find a lookalike audience to convert. Develop a conversion strategy to take customers from ticking one or two boxes to ticking all three.
6. Look to continuously improve
Business growth and success are journeys, not destinations. Actively looking for ways to improve your business, both internally and customer-facing, is an essential component to a good growth plan.
Base decisions on accurate information and regularly review data to glean insights. Monitor the effectiveness of your systems and processes, encourage clear and open communication between employees, and allow customers to provide feedback on their experience, whether good or bad. Stay adaptable, and alter your strategy accordingly.
7. Track your progress
A business growth plan, however good, does not guarantee results. Monitor these as you put your plan into action. Is your profit growth sustainable, or does it have a short shelf life and require several bursts over time? Tracking your progress lets you keep sight of your objectives and results in real time.
Benefit from IDEX Consulting’s Business Growth Program
Significant business growth relies on the right talent. We have provided innovative recruitment solutions in the insurance, finance and legal industries since 2006, and are well positioned to help you achieve your business growth plan.