Lift Your Margin in 10 Easy Steps
By improving your margin, you can instantly increase your profits without having to lift your sales.
It sounds simple enough, but often, businesses don’t do the kind of tracking that can make these simple switches easy. If keeping on top of the data isn’t your thing, then investing in experts that will take care of this for you should be top of your to-do list.
Our virtual Finance Director service provides all the support you need without the commitment or cost of hiring in-house. To find out how we can help, get in touch.
The 10 strategies to lift your margin:
1. Negotiate costs.
As the saying goes, ‘it’s the squeaky wheel that gets the oil’. Meaning if you don’t ask, you don’t get. Talk to all your suppliers and get your bartering hat on. If it seems like a daunting task, make sure to have all the information to hand; preparation is everything.
2. Update your pricing models.
Do your research. How do your prices compare to your competitors? Are you still relevant in the target market you’re aiming for? Make sure all details are up to date and that all costs are included in your prices. And, if they’re not, start thinking about how they could be.
3. Cost jobs.
You should be anticipating all costs that a job for your business might entail. If you don’t then back-cost them. Work out what you spent vs what you thought you’d be spending. Are you getting enough quotes in / putting business out to tender? Can you make the process any leaner?
4. Understand what you’re selling.
It’s time to take stock and figure out what’s not working hard for you. Have you got items that are slow moving? Anything that’s making a poor return? Selling old stock at cost will drop your margin, but if you replace those items or jobs with higher-margin items, you’ll achieve a higher return in the long run.
5. Budgets and targets.
This may seem like an odd way to lift your margins, but giving your teams something to work hard to achieve is a great way to get everyone on-side and motivated. Don’t forget to celebrate all the wins.
6. Report in real-time.
You can’t manage what you don’t measure. Using cloud-based software to report your results give you instant access to the information you need to increase your margins! Regularly check-in the key performance indicators you’ve set your business and manage them closely. Why not add them to your dashboard so they’re the first thing you see when you log on.
7. Reduce wastage.
Look at what processes need to be updated to help reduce wastage and re-work. Or, if your processes are correctly documented, think about what training your team needs to ensure the processes are being followed to reduce wastage.
8. Review your sales process.
Empowering your sales team with the right information will give them the best chance to sell the products and / or services that make your business the most money. Do they know which products have the highest margins, and more importantly, do they have the right training to make up-selling these an easy task? Identify and plug any skills gaps.
9. Make a plan.
Try not to scattergun your approach. Be methodical when working out what to do and when to do it. If you’ve got lots of areas to look at to improve your margin, make a plan. Write down all the areas you need to focus on and prioritise what will give you the best return.
10. Involve your accountant.
We don’t know what you don’t tell us. By keeping us informed you’re keeping your business one step ahead. We can help you to build complex forecasting models that align to your long-term aims. You can tweak these easily to show how making minor changes will have a big impact on your cash-flow.
If any of it seems intimidating to you then talk to us. We can give you clear direction and help you to create a long-term plan that will get your business on track for success.