How to Improve Business Profitability Through Smart Decision Making
In the world of small business every penny earned or spent makes an impact on the bottom line. Even the slightest shift with expenses can have an astronomical impact on the profitability of your business. _
If you’re looking or creative ways to reduce your business expenses, without impacting the daily operation of our business, we’re here to help as well. In the information below, we’ll outline some of the best ways to reduce overhead and other business expenses. When following the six ways listed below, you’ll be able to increase profitability while also keeping your business protected.
First – Obtain Professional Liability Insurance
One of the quickest ways for a growing business to fall into financial hardship is when a former or current client file a lawsuit. Whether it’s due to poor work performance, or a simple miscommunication leading to financial loss or reduction in business, the act of filing a legal claim can cost a defendant thousands of dollars. To protect your business from legitimate or outrageous legal claims, obtaining professional liability insurance is a smart first step to maintain business profitability.
Professional Liability Insurance is essential for pretty much any small business, but especially so for those that offer professional services and advice such as CPAs, interior designers, and landscapers just to name a few. This insurance keeps your business safe from claims that your product, service, or employees caused a third-party financial loss. It covers attorney fees, court fees, and investigation fees as well as any money the third-party may be awarded if any.
Second – Employ Online Marketing Strategies
The days of posting radio or television ads or distributing flyers through town to attract business is a thing of the past. In order to evolve, a business must evolve by reaching their future consumers where they spend the majority of their free time. As of June 2019, there are about 4.4 billion internet users worldwide, many of whom use mobile devices to connect with friends on Social Media platforms, Google search for local businesses, or complete their shopping online.
This is why the smart companies are investing more and more into online marketing strategies and campaigns. Companies have the potential to earn significant leads, convert those sales leads into paying customers, and increase profitability by implementing digital marketing strategies and advertising on multiple social media sites. It is a low-risk high reward system, so if you aren’t online, it’s time to get digital.
Third – Evolve Your Technology
Technology is the future. From cloud-based servers to Customer Relationship Management software, technology is an effective means to decrease company spending. Not only will implementing technology benefit your company, but it can improve operational efficiency, which reduces payroll, and will make things easier for your customers.
Fourth – Reduce Your Dependence on Credit Cards or Debt
While using a business line of credit or business credit card may seem like a good idea, it is not. Interest rates, hidden charges, and other fees can cause your business to hemorrhage money. Both in business and in life, the proactive business owner strives to make purchases, upgrade technology and pay current debts with cash or a debit card.
Fifth – Go Green and Reduce Consumption of Paper
Maintaining a sustainable business operation helps to save money on energy consumption, which likewise reduces monthly expenses. One of the best ways of starting this growing trend is going paperless. Try going green. Not only will it help to save the environment but going paperless will also save you a hefty chunk of change. It may not seem like the cost of paper, ink, and postage would make that much of a difference, but it is a non-essential cost to your business, and every penny count, right?
Finally – Develop a Strong and Responsible Business Budget
Budgeting is a huge part of business success. Having a set budget allows you to save money and lowers the chance of financial failure. It offers you a chance to control your finances and to be a step ahead of the game.
There are many other ways to save money such as downsizing office space, employee lay-offs, or finding less expensive offices to lease out. Some of these are just not viable options for your business so by following these simple six steps, you will lower business costs and have a higher profit margin in the long run.