Every business looks for ways to increase revenue and reduce expenses. When profits are rising and costs are decreasing, your company has margin for generosity to the community and employees, research and experimentation for new products or services, and a monetary buffer between your company and world events.
Below are 5 tips to improve your profits and lessen your costs.
1. Tend to current customers.
This suggestion both increases revenue and reduces costs. Gaining new clients is often an expensive venture when the time investment and marketing efforts are factored in.
Extensively train customer service representatives so customer relationships are maintained and, ultimately, strengthened when problems arise. Teach your sales teams ways to educate existing clients about new or premium products. Consider promotions as a way to introduce new offerings or upgrades to current clients.
2. Track expenses accurately and promptly.
To reduce costs, you first must know what you’re spending. Give employees and yourself an easy way to record expenses in real time and use accounting software to track the company’s overall expenditures. For more information on tracking business expenses, read here.
3. Purge underused and outdated subscriptions.
Yearly and monthly subscription costs of software applications, consulting fees, and support services can eat away at your profits. Set aside time regularly to review fixed costs with your team. Ask employees and yourself if these expenses are necessary.
Word of warning, though. Automation usually increases your profits in the long run, but it may have recurring costs – software fees, regular training, etc. Don’t cut fixed costs without analyzing how these reductions will affect the business overall.
4. Know your industry.
Every industry is different. Profit margins and operating expenses are not the same from one industry to the next. Know what is typical for your industry so you can gauge your profits and expenses against those benchmarks.
5. Incentivize staff members.
Encourage team members to spend company money wisely. Offer incentives for an increase in profits or a reduction in costs. Have regular meetings with staff to discuss these topics.
Morgan and Associates Can Help with Profits and Costs
This article is just the start. As an accounting firm, we’ve worked with many industries. And we have lots of ideas to help you increase revenue and decrease expenses. Use the contact form below to start a conversation.