It can be all too easy to just look at how much money you have coming in. But the higher your expenses are, the leaner your profit margin becomes.
Sometimes, improving the profitability of a business isn’t about making more money, it’s about spending less.
Outsourcing – There are many benefits to outsourcing, such as bringing in new perspectives and skills. But the biggest benefit is the potential money savings. Just make sure that you thoroughly understand the pros and cons of outsourcing, and make sure you partner with someone you can trust.
Remortgaging – Paying off a mortgage can be one of your biggest monthly expenses. Not satisfied that you got the best deal? Remortgages, also sometimes called second refinancing, is the process of paying off your current mortgage with the proceeds of a second one. It basically entails the transfer of a mortgage from one lender to another, so as to get a better interest rate or change the repayment amount.
Relocate – On the other hand, if you’re renting, then you might want to consider moving to a more affordable venue. However, you need to think about this carefully. If your business relies on its location, for instance a restaurant or a hair salon that relies on foot traffic, moving might not be the best idea. Even so, however, you can still try to renegotiate your monthly rent. In many cases, an owner would rather reduce rates than have a site sit empty for a year.
Go green – you’ll be amazed at how much a few green changes at work can save you in the long run. From reducing your paper usage, to decreasing your monthly utilities bill, there are many ways your business can benefit while you help the environment.
Buy second-hand – If you need to buy equipment or furniture, go for the used option. You can buy items that are as good as new for a fraction of the cost.
Interns – There are always students and graduates who would be grateful for any help. Rather than hire more full-time staff, bring in one or two interns who will be happy for the opportunity. While interns typically aren’t paid a lot, do endeavour to make it worth their time by giving them practical work experience they can learn from, rather than just making coffee.
Your net profit is equal to how much money comes in, minus how much money goes out. As complicated and confusing as the market place can be at times, the success of your business essentially boils down to those two forces. The difference between the inflow and outflow of cash.