There’s nothing more frustrating than making lots of sales yet seeing little to no profits. This is a concern for many startup owners as you’re clearly having no issues selling your products/services, but you aren’t going to grow or be successful without making a profit.
You have to assess the situation and conclude that the reason you aren’t making profits is that you’re spending too much money. Perhaps your product costs too much to make, meaning you barely generate profit on every sale. Or, more often than not, it’s other expenses surrounding your business that are doing the damage. Today, we’re going to focus on ways you can increase profit margins by saving money. The more you save, the greater your profits will be.
Here are some ideas that revolve around the main ways businesses spend too much money:
Downsize your office space
Firstly, turn your attention to your workspace. How much are you paying for your current office? Obviously, rental costs are one of the major factors to consider when selecting an office space, and you might be paying far too much. The cost of leasing and working in your office may be what’s pushing you over the edge and preventing profits.
So, ask yourself, can you afford to downsize? A smaller office in a different location could be much cheaper. Similarly, why don’t you ditch the office altogether and focus on remote working instead? It will be far more affordable, reduce operating costs, and help you widen your profit margins.
Outsource certain jobs
It’s never nice to let people go, but you may have to make this decision for the benefit of your company. Paying for employees is a costly practice, especially when you consider the additional benefits on top of their wages. Instead, you could outsource certain jobs to freelancers or companies. The benefit of this is that you don’t pay them a fixed salary, and you don’t pay any benefits. They get paid for the work they do, and that’s it. When comparing the two, outsourcing works out a lot cheaper.
This is a tough decision to make but think about it from this perspective. If you carry on in your current state, you won’t have a business for your employees to work for. They’ll be out of work anyway as you’re not making enough money to stay afloat. In this case, you’re giving them more time to find work, and you can always provide a great reference to help them.
Do you rely on suppliers to deliver certain materials or products to your business? If so, switching to a new supplier could help you save money. We get into a nasty habit of feeling loyal to suppliers. You stick with the same one for years, purely because you trust them and get along well together. In all honesty, it feels harsh to ditch them as they have done so much for you.
The problem is that they might offer prices that are far above the industry average. When you first agreed on a contract with them, their prices were okay. But, new suppliers have entered the market and offer better rates. Switching to one of them will help you save money, increasing your profit potential.
Work with an accountant
One job you definitely want to outsource is your accounting. Working with an accountant can help you find more ways to save money in and around your business. Most specifically, they could help you save money on your taxes. There are ways for businesses to claim tax relief that helps you cut your overall expenses for the year, paying less tax. It’s legal, but you need a qualified accountant to help you do it.
Furthermore, they can assess your cash flow and help you understand where most of your money is leaking. Some of the leaks will already have been covered, while others could be more specific to your business. An accountant can help you cut down on spending and improve your profits dramatically.
There’s one final point I want to make before you leave! Saving money to increase your business profits is effective, but it only works if you are generating a lot of money as well. Your first priority should be to increase sales and revenue, before focusing on saving money. Also, be sure that the changes you implement to save cash won’t have a negative impact on your output. You should still be able to make sales and hit the revenue numbers you previously hit.