Improving Your Business Profits

Profitability is the number one determining factor in what a business will sell for on the open market. Therefore, to get the highest value, you need to derive the highest possible profit.

There are lots of things to look for in finding hidden profit potential in a business, and these are often things that the owner simply hasn't had time to address or work on because of the overall demands of running the business.

Taking the time to do it, however, will bring two to three times the actual profit uncovered in adding to the value of the business, so it is certainly a worthwhile effort.

Here are some ideas of things to look for:

  • Analyze your customers for profitability, fire the unprofitable ones, and step up service to the most profitable
  • Overstaffing- having more employees than necessary for the amount of work being done
  • Understaffing, resulting in unnecessary overtime expenses
  • Carrying too much inventory
  • Overpaying for utilities, and not being creful to conserve usage
  • Paying for advertising that isn't bringing in adequate results- yellow pages often falls into this category
  • Not taking advantage of the best vendor terms- extending the terms and/or getting the early pay discount
  • Overpaying for insurance policies
  • Not managing inventory shrinkage and waste
  • Expired leases still being paid for equipment (more common than you would think!)
  • Overpaying for internet and web services
  • Overpaying for professional services you don't need or aren't getting the most from
  • and so on...

Although each item may not be that big, adding them all together can often create a substantial boost to the bottom line, which is then mutliplied several times over to produce the value of the total business. And sometimes there are surprisingly big savings hiding in some of the categories mentioned above and others owners are shocked to find.

If you are selling your business, then highlighting these items can justify a significantly higher price. If you aren't ready to sell but would like to find out how you can improve the profits in your business, we can do that as well.

If you want to build the value of your business in any situation, give us a call and let's see if we can work together to make it happen.