How to Increase the Profitability of Your Business

You continue to work hard every day, yet you are not seeing the profits you want in your business.  This is a frequent problem, that’s especially evident from the associations with whom I’ve worked within the previous 3 years as a mentor.  It’s very common to small companies without highly-seasoned management employees to tackle profitability questions.  Solving the problem of how to increase the profitability of your business is a strong move to creating business efficiency and facilitating business growth.

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Listed below are a number of primary methods to get a lower-than-desired profitability, which should you tackle, can offer a relatively fast and frequently simple solution.

1. Your expectations.

First, consider if you’ve got realistic expectations of what the company can achieve. This takes you to attempt to”grade” your scenario by:

  • Speaking to your accountant with expertise in similar companies to give you a good notion about what they attain
  • Speaking to your business or professional company to find out whether they may have the ability to provide you a few parameters
  • Going to the reference librarian in a company library in town, as they frequently can discover resources which offer profitability benchmarks for a variety of companies.
  • Performing a Google search to find out whether there are some resources that will assist you.

2. Evaluate your pricing structure.

Most of the time, a small increase to the price won’t have much effect on the sale of your product but it could definitely impact your bottom line.

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3. Assess your own overhead.

Often, among the biggest problems with small companies is the degree of overhead they take. This can be due to:

    • Too many employees
    • Rising health care costs.  You need to speak with your suppliers or maybe have your workers pay a few of the expenses of the policies.
    • 401K plans. You have to decrease or stop your gifts
    • Excessive spending on each traveling or amusement

4. Evaluate your price of products.

This is especially true for businesses which purchase finished products and resell them online. In certain scenarios, we have helped customers identify lower-priced components for fabricated items.

5. Let your bookkeeper or accountant take a look at your AR report to identify any potential issues or problems.

This is only one of the most frequent problems I visit at the score together with my clientele. They’re so busy running the company the receivables don’t get the attention that they deserve. You ought to be taking a look at an Aging of Receivables account at least every 2 weeks to identify issues which may have to be dealt with.  Recall”receivables do not purchase groceries, money ”

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6. Address the total degree of earnings you’re generating.

Your problem may be a revenue issue. You may need more sales to be able to accomplish a greater degree of profitability. But even when you’re in a position to boost your earnings, you have to deal with above-mentioned items too in the event that you would like to maximize your organization profitability.


Interested in learning about how to increase the profitability of your business, starting a business or growing a business in Santa Barbara? Contact us today for your free business consultation! Call Santa Barbara Entrepreneur at our Impact HUB location (805) 633-0877.