A Checklist For Increasing Profits
Aug 31, 2010
We’re wrapping up the Summer of 2010, and that means one thing. You should now begin planning your 2011 budget. While 2011 may be a better year for your business, you should not assume so without first carefully looking at your business, your competition, and your customers. At a minimum, prepare a contingency plan . . . but more about that in a future article.
The principal reason to budget is to help you focus on everything you do which can increase sales and profitability.
Here are a few suggestions of areas you should consider, a simple checklist for 2011:
1. Outsource. Look at every function that is performed and consider outsourcing to reduce costs and to improve performance.
2. Cut your personal expenditures. This action frees you up from worrying about those costs if the business is still slower than you’d like.
3. Reduce your personnel costs. Instead of hiring new full-time employees, consider part-time employees that can help with the work-load without incurring all the costs for a full-time employee.
4. Take advantage of tax incentives. If you are hiring, look into possible incentives for training and tax holidays.
5. Decide about year-end bonuses now. If you won’t be able to give a bonus to employees who have received them in the past, tell them now so that they can plan accordingly. You don’t want to have that kind of negative surprise later this year.
6. Reward employees for cost-saving ideas. A gift card to someone who suggests ways to reduce costs or be more efficient is a way to motivate employees and thank them with something tangible.
7. Raise prices. You may not be able to do so, but don’t overlook this possibility if you haven’t adjusted your pricing recently and, in particular, if your costs have increased. You’re at least trying to hold your own in this economy – not go down with the ship.
8. Communicate with your customers and prospects. If you do so using an eNewsletter, for instance, there are ways to identify who clicks on a link to a story or a product, and that might help you with your marketing and sales plans.
9. Update your website. That’s an entry point for many buyers. Offer some promotional incentive to move inventory. (And consider other social marketing alternatives.)
10.Educate your customers and prospects. Use your website to provide information that will enhance your position as an expert in your field.
11.Offer something for free. It could be product, or an hour of consulting services. Something to make people think about you and what you sell.
Finally, if you don’t receive reliable financial statements – statement of operations, balance sheet, and cash flow information – on a monthly basis, you need make changes right away. You simply cannot manage your business without that information – and that’s your principal responsibility as the owner or president of your company . . . to manage. (That’s also why you need to prepare that budget!)