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Increase profitability of your company with 6 tips

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Company performance increase profitability of your company, understanding by this concept the proportion that exists between the resources that are invested in the operation of the same compared to the profits and / or profits that are obtained is an essential indicator at the moment of making an analysis of the situation financial situation in which the organization is located as well as to evaluate the quality with which the administrative management of the same is being carried out.increase profitability

In order to know in depth the financial health of the company it is essential that you have information on financial statements up to date and that you know the status of each of the key indicators that you have in your business, this in order to know in what way It is investing and if this increases profitable.

In previous articles, we share formats so you elaborate your financial statements more relevant as balance sheet, income statement, and cash flow statement. Through timely and reliable information you can make more accurate decisions that will allow you to take your company to higher levels of productivity and increase profitability. Continue reading 6 Tips to Increase Sales of your Business

At component, we believe that your company can achieve its business goals effectively thanks to having strategic information and thus achieve a controlled and accelerated growth.

Today we share 6 tips that will help you raise the level of increase profitability of your company:

 Keep an adequate control of your expensesincrease profitability

Controlling your expenses has the advantage that every weight you save intelligently will become an extra weight that you will have a profit. For this purpose, it will be very useful for you to prepare a statement of monthly cash flow in which you will be able to analyze what items are being spent mostly in your company and in which adjustments can be made that allow you to be more efficient.

Similarly, it is recommended that you implement the practice of preparing budgets, with which you will be periodically monitoring the expenses and checking if the policy defined for them by each of your managers is being followed.

Increase profitability  your profit marginsincrease profitability

The profit margin is the difference between the sale price of your product or service and the cost of producing it, which the company pays for. There are several ways to increase the margin, such as:

  • Increase prices.
  • Reduce the costs of the products or services sold.
  • A mixture of both options.

If you do not agree to increase your prices it is important to remember that consumers will accept an increase in it as long as it is competitive with respect to other offers in the market and you are offering added value, therefore the price passes in the background. The important thing is to analyze it and find a balance in which you can increase your profits without sacrificing the number of sales due to the dissatisfaction of your customers.

Efficiently manage your inventory for increase profitabilityincrease profitability

The correct administration of your inventories is one of the key factors that affect the good performance of the companies and therefore the increase in their profits. It is essential that the company has a well-managed and controlled inventory so as not to generate unnecessary costs.

As we commented in the article ” Benefits of an inventory control system”, inventory management is composed of the control and planning of the same, in general terms it is about understanding three important factors:

  • How often should the inventory level be determined for each item?
  • When should an order be placed with the supplier?
  • What is the optimal quantity to order?

The monitoring and control of inventories is a core activity in your company because having a reliable visibility of it can make better decisions in addition to reducing costs by not burdening with excesses or missing merchandise and therefore offer a better service to your customer.

Analyze the profitability of your client portfolioincrease profitability

Being a company with a focus on customer service is one of the goals that many companies have. The current market is highly competitive and focusing on the customer can be a very important and sustainable advantage.

One way to know which customers are generating the most profits is through a current and potential increase profitability analysis in which you will identify in which clients it is convenient to invest more efforts since they will have a greater impact increase profitability, in this way it will be convenient to retain them and retain them. Try to have all the possible information of your clients, thanks to this information you can create promotions and offers of products and/or services that will generate more value for your current client.

Increase the re-purchases of your product for increase profitabilityincrease profitability

When you think of increasing sales by generating it, you have the idea of expanding the number of customers you currently have to increase the amount of billing; However, each new client is a significant cost for the company since it is necessary to make an investment to find, qualify and serve them.

Every current customer that is counted in the company and makes a re-purchase has a much lower cost and offers more profits, therefore it is more profitable. Also if you consider that a person to repeat a purchase is because he is satisfied with the company then this person can in the near future be a reference and promoter of your brand which is convenient since you would be getting new customers at a lower cost than if you found them by your own means

As you can see to increase profitability, it is important that you focus on offering a high-quality product or service to your customers that will provide added value. To improve the profitability of your company focus on offering quality services that really help your customers.

Technology as an allyincrease profitability

A key factor for increase profitability of your company is the integration of information to make accurate and timely decisions, avoid re-jobs and minimize the margin of error when entering and managing data and important indicators for business operations. Technological solutions play an important role in this issue by optimizing internal processes and saving costs, thus achieving a more efficient company in the use of both capital and human resources.

Lean on tools that allow you to maximize the potential of your business to focus your efforts on the activities that are really generating a value and so you can plan more effectively to achieve strategic goals.

Meet SAP Business One, the ERP for SMEs that will help you integrate all areas of your business so that you have access to valuable information in a timely, clear and reliable manner. Take better business decisions and take your business to higher levels of productivity and increase profitability.

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The author is an expert on occupational training and a prolific writer who writes extensively on Business, technology, and education. He can be contacted for professional advice in matters related with occupation and training on his blog Communal Business and Your Business Magazine.

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