Without so much introduction, we all know that business has to make profits. Hence, if you’re a business owner, entrepreneur or a manager in charge to boost the profitability of your company or organization, the following 10 tips will guide you on how to increase your business profit.
1. Increase owner’s capital or investment. More investments mean more ROI (Return on Investment). Don’t play too safe. Investing in business has its own risks. However, these risks can be calculated. Thus, if you have money that are sleeping or buried in your personal account, put a portion of it into your business operations according to your tolerable risks. Also, if you are squandering your money in personal expenses that don’t have meaningful returns, try investing the money you are wasting into your business to increase your financial assets, as well as your financial performance. You can use it to increase your production, thereby increasing your revenue and profit.
2. Increase your debt. If you don’t have your own cash or assets that you can put into your business, then try to obtain loans. You can get loans from banks, credit cooperatives, government financing programs, or even from your close friends, parents and relatives. Just like investing more capital, obtaining additional debts also increases your assets, which can be used to generate more income and profit. Loans are inherent to businesses. Even the largest companies in the world have liabilities. Just make sure you can pay on time, whether it’s short-term or long-term.
3. Decrease your interest-bearing debt. Interest from loans is an expense. However, if the interest expense you incur is compensated by more profits generated from your loan proceeds, it’s just fine. Interest expense is even deductible to your taxable income subject to limits. But if you have idle cash that you can use to pay your interest bearing obligations, it is wise to settle your interest-bearing debts to totally save from interest expense. When you decrease your interest expense, your profit will increase. Anyway, you can retain your non-interest bearing financial obligations, which don’t cause you finance cost. But though they don’t bear interests, they must also be settled when due.
4. Decrease your assets. One way to increase your profit is to sale or dispose your idle assets for a selling price more than their net book value. That will give you gains and therefore will increase your net profit. You can also utilize your idle assets in your business operation. Example, if you have an idle warehouse, you can rent it out to earn rental income. Here, you will earn net profit for the excess of your rental income over your depreciation expenses and other related costs in leasing out your warehouse.
5. Increase your sales or revenue. Assuming your cost and expenses will not significantly increase, a significant increase in your sales or revenue will increase your net profit. One way to do that is to increase your selling price per unit of goods sold or the prices of your services. However, you must assure to not overprice your products. You will only do this, if you think that you are selling your products at unreasonable low prices. If you don’t want to increase selling price, you can increase the quantity of your goods sold by offering discounts. This will decrease your selling price. But if you will achieve more quantities of goods or services being sold, the discount and reduced selling price may be compensated with your increased sales volume.
6. Decrease your expenses. If you can reduce your small business expenses without reducing substantially your sales or gross revenue, your net profit will consequently increase. To do this, you should reduce wastes or those spending that don’t really contribute to the generation of your income. These expenses may include entertainment expenses and expensive advertising expenses. You should also take efforts to save and avoid wastes on supplies, communication, travel, electricity and power expenses.
7. Increase your expenses. While you can increase your profit by reducing unproductive expenses, you can also boost your profit by increasing your productive expenses. If you clearly see great opportunities to increase more sales or profit, like for example if there is an increase demand on your products, you can increase your input or cost of production or increase your expenses that are directly attributable to producing those high demanded products. If you have few people in your company, but your clients are increasing, you can hire more people and spend more salaries and wages in exchange for more revenues that will eventually compensate your increased employee expenses. You may also try to outsource some of your routine and tedious tasks so that you can concentrate on tasks that can give you more profit.
8. Increase your workers. As we discussed in #7, increased labor may increase your production, as well as your sales. However, we must not also forget to boost the morale and motivation of our workers or employees. We should remember that happy, motivated and inspired workers are productive workers. Therefore, consider giving your employees the due treatment and benefits they need. A harmonious relationship inside an organization will always contribute to a more profitable and stable business.
9. Increase your co-owners. One of the common mistakes made by small business owners is having the attitude of running their business alone. Perhaps they are not comfortable to having partners or co-owners who will share in their profit. Another reason is that they can’t find trustworthy business partners. However, in the business world, the successful businesses are those that are owned not only by a single person, but of many persons, natural or juridical. More owners mean more capital or equity, and more equity means more business performance and profit. Thus, we need to trust people and give them a slice of our organization. If you think your business needs to expand now, then open it for business partnership or corporation. Besides, you will always be the first founder, isn’t it?
10. Increase your customers. Customers are the breath of your business. Without them, you won’t generate sales. But how can you increase your customers? Attracting customers should be a consistent process. It involves ensuring the satisfaction of your customers. To satisfy your customers, you should ensure the quality of your products. To ensure the quality of your products, you should ensure your business productivity. To assure business productivity, you should motivate yourself and your workers. To motivate yourself and your workers, you should become happy. To be happy, you should be thankful. To be thankful, you should value life.
I hope the tips above will help you boost not only your business financial profit, but also your business true profits. Also remember to organize your business and harmonize all the tips above so that they can work as one and eliminate the waste and expenses of disorganization. I wish you all success and best results!