6 Steps to Increasing Your Business’s Profit Margin
Jun 20, 2019

While substantially increasing your sales can help your business to make more money each year, there are other ways to boost your company’s profitability and ensure its longevity.

If you want to make 2019 your organization’s strongest financial year yet, you must routinely look for ways to secure its growth. Here are six steps to take to increase your business’s profit margin.

1. Increase Your Pricing

If you are struggling with mounting overheads and want to find ways to double your profitability, consider increasing your pricing. While it could result in you losing a small number of customers, it could augment your annual profit margin, so it would have been a worthwhile move. However, don’t increase your pricing too much or you could rule your business out of the market.

2. Review Your Suppliers

If you suspect you are being overcharged for various services or goods, you must review different suppliers in your industry to find the best deal for your needs and budget. For example, routinely compare commercial gas prices to add hundreds or thousands of dollars onto your profit margin.

3. Stop Wasting Money and Resources

Sadly, many companies fail to learn from their internal mistakes, which can dent their profit margin. For example, rather than spending money on a marketing campaign that fails to connect with an audience, spend your time and resources on developing more compelling strategies. You also must encourage your sales team to follow up on all leads to avoid a loss in custom, especially if you have spent a considerable sum driving them to the business.

4. Deter Theft

Unfortunately, your staff or customers might be tempted to steal from your business each day, which can slowly but surely destroy your organization’s finances. To deter theft, you must introduce anti-shoplifting measures, such as:

• Monitoring customers and staff on CCTV
• Educating employees to spot the signs of a shoplifter
Hiring a security guard
• Hanging signs and mirrors across your business

You also must routinely balance your tills and pay close attention to who completes your company’s banking every day.

5. Pay Bonuses to the Right Employees

It is imperative to reward employees based on merit. If you grant every member of staff with a bonus, you could be handing over your company’s hard-earned finances to employees who fail to go above and beyond for your organization or regularly hand out discounts to clients to secure a sale. To save your company money and grow your profitability, you must review each member of staff’s performance to identify whether they deserve an annual bonus.

6. Say Goodbye to Unhelpful Customers

If you have a large database of clients, you should meet with your sales representatives to identify their biggest complainers. You must then compare the cost of a client’s order to the cost of managing their account. If they are costing the business more than it is making from the order, it might be time to say goodbye to the account, so you can focus your attention on your less demanding clients.