How to review profits and rethink your business strategy

Your products or services with the highest gross profit margins are the most important to your business. They generate more money. Once you have identified your most profitable items you should concentrate on achieving higher sales targets for them. This may require you to rethink aspects of your business or to devise strategies for improvement.

When you have identified and measured your key profit drivers, you should develop strategies 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.

Good systems and processes will help you minimise errors. Make it a policy to learn from mistakes and improve your systems as you find ways to work smarter. It's a good idea to review your systems at least once a year to see where improvements can be made. Don't forget to seek the input of staff as well to make sure your systems and processes are the best tools for the job.

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

Get help from your accountant to ensure you're monitoring the right indicators for your business because staff tend to work towards them if they are critical for the business or not.

Take action

A very wise person said that hope is not a strategy. Take action when needed. Don't let problems linger. If you made a buying mistake, don't hold on to the product. Take the hit and get it out the door so you can generate cash to buy or produce products that will sell.

Look around you

Find out what the leaders in your industry are doing. As long as they are not direct competitors, most are willing to share ideas. Join a peer group that shares numbers, not just war stories. I know many businesses that are alive and flourishing even in today's challenging times because of ideas and insights they gained from such groups.

Take a look at how I provide benefits and value for my clients and then talk to me about what I can do to support your business. To maximize the productivity and efficiency for your business, be it a new startup or well established, it is essential to have access to the right information, knowledge, and assistance. I have the knowledge and I get hired by both small and large businesses to help improve business performance and lift profits.