Cutting costs is often a common way for businesses to see immediate revenue results. Especially in tight times, like the Covid-19 pandemic; cost-cutting reflex is understandable . For pushing the growth of the business, strategists need to understand how to maximize the results by cutting the costs that are bringing down the profit and eventually leading to uncertain future and halting growth.
Here are some of the strategies that any business can take to maximize the results without affecting the revenue and profit:
Increase productivity of your staff – recognize and reward staff contributions with staff performance reviews, and teach them sales skills and how to up-sell products so customers make multiple purchases at one time
Develop new product lines – survey your customers and know about their needs and develop new products
Find new customers – Is there a product line that sells a lot better than others? Find similar 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
Decrease inventory – stock control is a good way to streamline your business
Decrease direct costs – make sure you have the right suppliers for your business and negotiate for better prices or discounts for buying in bulk
Decrease indirect costs – for example, try to minimize waste and errors in your business by training staff, or reduce marketing costs by using low-cost marketing techniques
Decrease overheads – for example, save energy wherever possible or try find a cheaper energy supply company
Benchmark key financials – bench-marking your business helps you compare your costs (like rent and utilities etc.) to similar businesses in your industry to see if you are paying too much
Once you have chosen strategies to make your business more profitable, you should prioritize them in order of importance. It’s a good idea to write down your goals and the corresponding strategies to achieve them, and also how you plan to implement your strategies.
Your products or services with the highest gross profit margin are the most important to your business, as 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. Consider using a business adviser to help you.
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