Strategy to 'Shake Up' Your Profits and decrease costs (Part One)

Gary Chamberlain
Sep 21, 2022
2 min read

(1) When you have identified and measured your key profit drivers, you should develop a strategy to grow them... without increasing costs. Making your business more profitable involves looking at ways to increase sales revenue as well as decreasing your costs and benchmarking your business to see where you can save money.

Focusing management awareness on profitability can have a dramatic impact. The most commonly used key performance indicators (KPI's) are

actual sales against forecasts
costs against budgets
gross margin
staff costs

You can get my help to ensure you're monitoring the right indicators for your business because staff tend to work towards them.

Encourage senior staff to delegate simple tasks to more junior staff who could do just as well. This will free up time for senior staff to focus on directing the business.

Monitor and measure your employee performance and productivity and reward productive employees by linking pay and other benefits to effectiveness. It's important to praise and thank staff when it's due, to keep motivation high.

Good planning helps you to anticipate problems and adapt as circumstances change and allows you to set goals and measure performance. Set measurable, time-limited targets to monitor how effectively your plans are implemented, Review what you've achieved so you can learn from your experience and make continuous improvements.

Set up systems that encourage the communication of best practice in your business. For example, benchmarking different parts of the business against each other can be a useful way of identifying and sharing best practice.

Improve communications with your customers and suppliers – they can offer useful tips and advice. Your customers will be aware of any problems and can tell you what you need to improve. Avoiding customers you know have complaints may simply make matters worse and mean you lose the opportunity to improve your business.

You should also prioritise the strategies you've chosen to improve your profit so you can focus on the most important ones.

Strategies to increase sales revenue

Increase productivity of your staff - recognise and reward staff contributions with staff performance reviews, and teach them sales skills and how to upsell products so customers make multiple purchases at one time
Develop new product lines - survey your customers about new products
Find new customers - new customers can help grow your business
Find new markets - use market research to determine if you could expand your business into new areas
Customer service - improve your customer service and develop a staff training program
Increase your prices - check if you have priced your goods and services correctly and if you could increase prices without reducing sales
Price discounts - consider price discounts and promotions to increase your customer base (e.g. 2-for-1 deals or happy hour)
Retail displays - use effective retail displays to increase your sales