Successful firms are constantly searching for ways to trim their costs and increase their revenue, in good times and bad. Vicki Arnstein considers the steps you can take to make your business leaner and more profitable
- Carry out an audit. Review your outgoings and incoming revenue. This will highlight any costs that seem particularly high and any parts of the business where your revenue has inexplicably dropped.
- Streamline your running costs. Could you cut your utility bills by using energy more efficiently or by changing supplier, for example? Review your travel costs and consider how much of your work could be done online and at home.
- Assess your staff bill. If your employees are not busy all of the time, look for ways to reduce staff costs. Ask them if they might be open to voluntary measures, such as reduced hours or flexible working. Take legal advice if considering changing employees' terms and conditions.
- Improve your purchasing. Assess the cost of any materials needed to supply your goods or services. Could you reduce this without making your products less desirable, by switching to slightly lower specification materials? You could also consider putting work out to tender to find more cost-effective suppliers. Review your utility providers - it's now much easier to compare tariffs and switch supplier.
- Reduce your stock. Consider whether you can cut back the level of stock you hold. Can you get hold of or manufacture items quickly enough to satisfy customer orders without having goods sitting in storage for long periods? Aim to keep just enough stock to service your customers' needs.
- Look for growth opportunities. If competitors are falling by the wayside, look for ways to take advantage and expand into different parts of the market. Now might also be the time to seriously consider mergers with competitors to strengthen your position.
- Protect your marketing spend. Focus your marketing efforts on your most profitable customers and calculate how much revenue you need to make for your advertising promotional spend to be worthwhile.
- Boost staff productivity. Home and work worries can make employees less productive support your staff with training and try to increase morale by offering simple rewards and incentives.
- Protect against currency fluctuations. If you do any business overseas, protect your company from adverse exchange rate fluctuations by trading in pounds where possible, setting up a foreign exchange bank account or drawing up a forward contract with your bank (buying an amount of currency at an agreed exchange rate on a fixed date).
- Keep on assessing. Review your spending regularly and keep seeking ways to improve income. Make sure you regularly take stock of where costs can be trimmed and your revenue boosted.
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