4 top tips for improving profit
Today’s blog post guides you through 4 simple changes you can make to improve your business’s profitability. Read on to find out how!
Four simple ways to improve business profit within 12 months
Most businesses don’t need big ideas or complicated plans to improve profit. In practice, profits will usually increase by tightening up a few everyday things and being more deliberate about how time and effort are applied.
Almost everything you can do to improve profit fits into one of four areas:
- Get more customers.
- Sell more to your existing customers.
- Put prices up.
- Reduce costs and waste.
Getting more customers
Some customers cost you more to serve than they give you. Avoiding these kinds of customers and finding more profitable ones can make a big contribution to your bottom line.
First, you may to analyse your customers to find out which ones make you money, and which don’t. Many businesses find that most of their profit comes from a small proportion of their customer base.
Once you know which customers are profitable, identify the characteristics they have in common. This will help you identify what your ideal customer looks like.
Then consider what you can do to attract more of those customers.
Selling more to existing customers
This is often the easiest and cheapest way to improve profit. You already have customers who trust you. Many of them would be happy to buy more if you provided the right opportunity.
Start by making a list of your top 20 customers and ask:
- What else do they buy elsewhere that we could provide?
- Do they already ask us for things we don’t supply yet?
- When did we last speak to them properly?
You could consider scheduling some time each quarter to email or call previous good customers. Let them know about a current offer or a seasonal service that may them.
Raising prices without losing good customers
Increasing your prices is another way to improve profitability, but it is often avoided due to the fear of upsetting customers.
Using your analysis of which customers don’t make you money, look especially at those where work seems to overrun or generate complaints or rework, or customers that feel stressful to deal with compared to what they earn for you.
Put the price up on this work so it becomes profitable for you. If the customer accepts the new price, then all well and good. If they decide to go elsewhere, the effect on your profit could be minimal. You will gain time to find a customer who will pay better.
Other things you could think about include:
- Don’t discount by default. If a discount is always expected, it’s not a discount; it’s your real price. If discounts are the norm in your type of business, then at least ensure that the discounted price is the price you need to get. If someone pays full price, that’s a bonus.
- Charge for extras. Make sure that you price extras rather than absorbing them. Extras could include variations to the work agreed, urgent work and additional meetings.
Reducing costs and wasted effort
Cost savings don’t need to feel painful if they focus on waste rather than essentials.
A prime candidate for cost savings is unused or rarely used subscriptions. Check for software, apps, memberships and other tools that are no longer useful for your business and cancel them.
Review your suppliers and consider whether you could get a better deal by switching to someone else. Are you paying for a service level you don’t need? Have prices been creeping up and you’re no longer getting a good deal?
Final thoughts
Improving profit doesn’t require a new business model or a lot of complicated tools. Picking one of these main areas and concentrating on it for a time often yields good results.
With the uncertainty the economic climate presents, ensuring that you are maximising profitability will help to make your business more resilient and better able to weather any storms.
Why not talk to us about our 12-month profit improvement tool which is designed to get you thinking about how you can take advantage of future opportunities and improve your bottom line!
Questions to ask when using AI to find IT vulnerabilities
The National Cyber Security Centre (NCSC) has published a new blog on questions to ask when using AI models to find vulnerabilities in your IT system.
Cyber criminals are increasing the use of Artificial Intelligence (AI) to enhance their ability to make cyber-attacks. However, AI can also be used by businesses to discover vulnerabilities in their own systems first and shore them up.
Before throwing caution to the wind though, the NCSC recommends considering some important questions. These are:
- What are you trying to achieve by using AI?
- Is using AI the best way to improve security?
- Do I have a process to manage any vulnerabilities that AI finds?
- How should I prioritise vulnerabilities?
- What are the risks when using AI to find vulnerabilities?
- What AI model should I use?
- Where should I start?
- What’s my long-term plan to deal with new AI models?
- Where do I need to invest in people?
- Do I know how everything we develop or use is patched?
To read the blog in full, see: https://www.ncsc.gov.uk/blogs/10-questions-ask-using-ai-models-find-vulnerabilities
Government commits to self-driving technology
The government has announced it has signed a new partnership with Wayve, a British company that is developing self-driving vehicle technologies.
The partnership will focus on shared research that will support the ongoing development and deployment of automated vehicles.
It is hoped that the partnership will act as a catalyst for new investment, skilled jobs and long-term growth across the UK car industry.
A Memorandum of Understanding sets out how the Department for Business and Trade and Wayve will collaborate on research helping to take self-driving vehicles from prototypes through to commercial reality.