Even in good economic times, Maine-based small business owners can find it difficult to grown their profits. There’s a lot to be gained by learning how to become more profitable without growing the company bigger.
Consider a Profit Audit
Most small businesses have marketing plans, and even business plans that they can show to bankers. Few, however, have developed a profit plan that can explain to lenders what their real profit potential is.
It’s important to note that traditional profit projections are very limiting. Usually these are based on previous performance, and when the business reaches those goals, there is a tendency to sit back and do nothing else. It is much more helpful to develop a profit plan that will give continuous incentive to improve.
To come up with new profit ideas, small business owners can examine each of the five areas of the business: sales and marketing, personnel, financial matters, operations, and issues of organization. It is not unusual to find hidden profit potential in all of these areas. Most businesses, however, are strong in some of these areas and weak in others. The idea is for companies to build up the weak areas so they can contribute and even become profit centers.
Many business owners assume that the obvious way improve profits is to lay off employees. Usually, though, this is ineffective and not really necessary. With most companies, the problem is not too many people, but too much unnecessary work.
These days, many companies complain about their inability to boost profits by raising prices. It can be done, though, when a business is aware of which products or services are most important to their customers. Business owners should perform in-depth customer research, resulting in adding or dropping products, and probably re-pricing them.
To find out more about maximizing company profits, schedule an appointment with Filler & Associates.