Give your profits a leg-up
According to the Sensis Business Index, 53 per cent of the 1800 SMEs surveyed in April were confident about the year ahead.
Christena Singh, the report author, said SMEs were expecting increases in sales, prices, profitability and capital expenditure in the next 12 months.
Giving profits a leg-up can come from increasing revenue or decreasing expenses or a combination of the two.
Here are some tips for improving profits.
■ Benchmark key financials: how do your costs compare with your competitors'?
■ Target major overheads.
■ Switch suppliers: a new financial year can be a good opportunity to do some comparison shopping, reviewing such things as bank loans and insurance and freight costs.
■ Wangle a better deal: get a better deal from an existing supplier.
■ Target loss: better systems and procedures can reduce the impact of theft, errors or waste.
■ Increase your prices: Lisa Penson, business mentor, Clearly Business, says often small businesses are reluctant to raise prices and they can end up out of step with their competitors.
■ Find new markets and distribution channels.
■ Target referrals: Olivia Maragna, a co-founder of Aspire Retire, says it aims to turn clients into "raving fans". The result? In its 10 years in business it has built a referral rate of more than 95 per cent.
■ Listen to your customers.
Andrew Graham, of RSM Bird Cameron, suggests listening to your customers' problems and thinking about how your business can provide a solution.
Frequently Asked Questions about this Article…
Give profits a leg-up by combining revenue growth and cost cutting: benchmark financials, target major overheads, review suppliers and pricing, reduce loss from waste or theft, pursue new markets and distribution channels, and focus on referrals and customer feedback.
Benchmarking helps you see how your costs and margins stack up against rivals so you can target major overheads, spot inefficiencies and prioritise the biggest opportunities to improve profitability.
Use the new financial year to comparison shop — review bank loans, insurance and freight costs — consider switching suppliers or negotiating a better deal with existing suppliers to lower ongoing expenses.
Introduce better systems and procedures to target loss: tighten controls, streamline processes and monitor key metrics so theft, errors and waste have less impact on your bottom line.
Yes — while many small businesses are reluctant to raise prices, increasing them can improve profitability and keep you in step with competitors, according to business mentor Lisa Penson.
Expanding into new markets or adding distribution channels creates fresh sales opportunities and diversifies income streams, helping lift top-line revenue and overall profitability.
Referrals can be hugely valuable: Aspire Retire co‑founder Olivia Maragna says turning clients into 'raving fans' helped build a referral rate above 95% over 10 years. Focus on excellent service and deliberate referral programs to boost word‑of‑mouth.
Listening to customers reveals problems you can solve, which can lead to better products, higher sales and stronger retention. Andrew Graham of RSM Bird Cameron recommends using customer insights to shape solutions that drive profitability.
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