There’s always room for improvement at the margin; small tweaks can massively boost your bottom line! How much extra would a 1% increase in gross margin give you? #FinancialAwareness #Profit #Margin
Improvements can always be made at the margin. Small tweaks to your processes or systems can make a massive difference to the end result. It’s the same with your business margin – a 1% increase in your gross margin on £500,000 of sales is an extra £5,000 on your bottom line.
The best part about improving your margin is that you increase your profit without needing to lift your sales.
-
Negotiate better prices with your suppliers.
As they say, ‘the squeaky wheel gets the oil’, so if you don’t ask, you won’t get.
-
Update your pricing model.
Make sure you’re using the most recent supplier prices and that all costs are included in your price.
-
Back cost jobs regularly.
Review exactly what you spent on 2-3 jobs each month and compare the actual cost to what you anticipated the cost would be when you quoted the job.
-
Get rid of slow-moving items or work that has a poor return.
Selling old stock at cost will drop your margin, but if you replace those items or jobs with higher-margin items, you’ll achieve a higher return in the long run.
-
Set budgets and targets with your team.
Give your team something to aim for. Celebrate success when the targets are achieved.
-
Report your results on a cloud-based, real time system.
You can’t manage what you don’t measure! Regularly monitor your most important Key Performance Indicators on your dashboard.
-
Reduce wastage and re-work.
What processes need to be updated to help reduce wastage and re-work? Or, if the processes are correctly documented, what training do you need to provide to your team to ensure the processes are being followed to reduce wastage and re-work?
-
Review your sales process.
Does your sales team know which products or services have the highest margin? Do they know how to upsell to those higher-margin products or services? Identify the sales skills gaps in your team and implement training.
-
Make a plan.
There are plenty of areas for improvement in your business. Unless you write them down, you’re unlikely to bring the correct focus to them. Make a plan to improve one area at a time.
-
Involve your accountant.
Not only to help you with idea generation and building a plan, but also to hold you accountable to do the things you need to do.
We can help you lift your margin – contact us today!
“To improve is to change; to be perfect is to change often.” – Winston Churchill