- August 8, 2021
- Comments: 0
- Posted by: user
The whole point of running a business is to make money. That doesn’t mean that you should be blind to anything but money, money, money. Building a healthy business is all about being strategic. There are times when losing money now can mean a big pay off later. But in the main, you should only lose money if it’s to increase profits and for the health of your business later.
Here are simple guidelines to follow. They aren’t too specific because every business and industry is different and some of these might not apply to you. But even so, consider them all – just in case.
Increase or decrease what you charge.
Have you ever sat down and thought about what you charge? People judge a price on the basis of what they get in return. What is it worth to them? Would they pay more – what can you do to enhance worth to make that price increase look worthwhile?
On the other hand, if I drop my prices will I sell more and actually make more money?
If you sell plates – why not sell knives and forks as well? Remember too that you can bundle a physical product with a service (or the other way around). You can be innovative with this too. If you sell plates – give a free information pack on table presentation and the etiquette of cutlery (which is the salad fork and where does it go?)
Cut your costs
Write down every cost your business has and then try and justify each and every cost. Don’t forget employees and don’t forget procedures. It might seem cheaper to have the wait staff at your restaurant handle the phones. But would you actually make more money if you hired a receptionist to do it instead?
But a word of advice here. Be strategic – not cheap. Penny wise, pound foolish is a very old saying and still very true. You have to balance being wise with your money against the need to spend money – to make money.
Online advertising is a good example. Ads on Google cost money. But if you don’t spend that money – people won’t buy from you. So spend the money but track every cent and compare that to what you make back (if you don’t know how to do that using the free tools Google provides – then pay for an expert to do it for you). If you spend $100 but make $1000 – that is money well spent. But then increase that budget to $1000 on ads but only make back $1500 – well maybe that extra would be better spent elsewhere.
Maximise cash flow
This is really where you should consult your accountant. Cash flow is LITERALLY the life blood of your business. Your accountant is trained to look at everything in the big picture but also the little details. Small things when added together can be a big part of making – or losing money.
It is VITAL that you should ALWAYS be 100% aware of your cash flow and aware of when it’s having problems and in the 21st century it has never been easier to do so.
Audit, measure, record and evaluate
Same as above. Computers and online software means you can automate everything and be aware from anywhere about EVERYTHING to do with your business. How much are you spending versus how much are you making? Use your bookkeeper and software and measure everything.
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