Happy New Year Sydney siders! Welcome to a fresh start, for both your business and your business’s profit margin.
The Orbit team is back in the office on 10th January and are eager to make this year your best one yet. Whether you went into business to have more time with the kids, more bottomless brunches or more trips around the globe, there’s no reason not to get more out of your profit margin this year. So whether you’re all buddy-buddy with your current profit margin, praying for a miraculous turnaround in 2022 or somewhere in-between – there’s always room for improvement when it comes to your bottom line.
A small tweak here and there to your current systems and processes can make a world of difference to your business (especially for small business owners). To kick off the year without a hitch, we challenge you to implement ten profit margin boosters this January.
And, did we mention that you don’t even have to increase your sales to reap these benefits?
10 strategies to improve your profit margin.
1. New year, new negotiations.
To quote Mahatma Gandhi, “If you don’t ask, you don’t get it.” So if you want your suppliers to cut you a good deal, you’ll need to have the conversation first so be sure to add negotiating better prices to your January to-do list.
2. Renew your pricing model.
When was the last time you reviewed your prices? If it wasn’t on your 2021 agenda, make it a top priority this month and ensure your current pricing structure is up to date with the latest cost of sale.
3. Walk down memory lane.
If you’re not already in the habit of doing so, each month, take a look at two to three projects or appointments you worked on and compare the cost you quoted against the actual cost of the job. If you’re using value-based pricing, it’s still crucial to know your internal hourly rate to ensure you’re not underquoting your offerings.
4. Get rid of the baggage.
Unless all your products sell at the same frequency or each of your services has equal profitability – take stock of what works and ditch the rest. While selling your old stock at cost price will reduce your margin, it’ll be more profitable in the long run if you replace those items with a higher margin. The same goes for your higher return projects, packages and appointments.
5. Shoot for the stars.
Don’t forget to set your budget and targets for 2022, and even if you land in the clouds, your team will have something to aim for. While you’re at it, be sure to celebrate your wins together, no matter how small.
6. Get your KPIs on tap.
You can’t manage what you can’t measure, and it’s a whole lot easier to keep to a budget and meet your targets if you know precisely how you’re tracking. To implement this, set up a cloud-based dashboard to display all your KPIs so you can keep tabs on your progress in real-time.
7. Fix the leaking bucket.
If your business has a less than ideal amount of wastage or rework, set aside time to fix up your processes this month. If your processes are already up to scratch, ensure all of your procedure documentation is clear and easy to follow to reduce any wastage or rework and consider providing additional training for your team.
8. Supercharge your sales.
If you’ve already completed step #4, you’ll have discovered which products or services have the highest profit margin – but is your sales team in the loop? If not, bring them up to speed and while you’re there, identify any gaps in the sales team knowledge, including how to upsell your offerings.
9. Nobody puts Margin in the corner.
We know, we know, as a business owner, you’ve got a million and one things to remember. But no matter what, your bottom line – and all the strategies to improve it – should not be put to one side. So write down said improvements, make a plan and tackle it like any other business task, one step at a time.
10. Keep calm and call your accountant.
If your margin boosting to-do list is composed of this list and this list alone, it’s never too late to get your accountant involved. Not only can proactive and strategic accountants suggest ways to improve your bottom line, but they can also help you build a custom plan and keep you accountable along the way.
Want to discover more ways to boost your profit margin? At Orbit, we make more possible for our clients by empowering them with numbers and providing smart, specific advice. Whether you’re chasing more profit, more time, more freedom or more anything under the sun – book a chat or get in touch with our team today, and let’s make it a reality this year.