Higher sales do not necessarily mean more profit. Ensure higher volumes will bring higher margins.
2. Reduce costs
Understand your costs and control them. Be flexible and innovative in seeking more cost-effective solutions.
3. Suppliers
Make comparisons on suppliers' prices, but also explore the quality of service you will receive from them.
4. Expenses
Keep your business expenses to an absolute minimum. Remember, take care of the pennies…
5. Product mix
Know the costs associated with all products or services and their margins. Production, sales generation and delivery of each product should be in proportion to the profit it generates.
6. Raise prices
Understand supply, demand and pricing in your sector. Keep abreast of the competition. Pricing is about what the market can bear.
7. Control your credit
You are not a banker – keep on top of debtors.
8. Capital
Use any capital that is tied up in the business to increase profits. Control stock levels and assess outsourcing or buy-in. Dispose of redundant assets.
9. Recognise relationships
Recognise the relationships between sales, costs, products, price and capital. See the big picture. A change in one may not have the impact you want if it is not considered in the total context.
10. Review and manage
Keep records and check trends and patterns. Analyse the effects of internal and external changes. Understand the threats and measure the long-term impact of changes.
About the Author
Len Collinson has been the FPB's National Chairman since 2002. He is a founder and a director of Collinson Grant Group, the firm of international management consultants, and has investments in three other companies.
