10 Ways to Improve Profitability Implement these tactics for cutting costs and boosting your bottom line.
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No matter how much you generate in sales, the most important key is generating bottom-line profit. Profit is what provides opportunities for future growth and expansion.
Here are 10 ways to cut costs and improve your bottom line.
- Reimburse employees for mileage rather than providing a company car. It will save you on insurance, maintenance and multiple other costs.
- Use virtual communication in your business to minimize office space rent. If it makes sense to take advantage of telecommuting, then do it. Your employees will thank you and so will your bottom line.
- Drop ship products straight from your vendor to customers so you don't have to worry about storage costs, including rent and insurance. These costs eat up your profits, so minimize time and costs by shipping direct.
- Provide insurance allowances to your employees instead of offering group health insurance. Small businesses often can't afford to offer health insurance, but you can still provide a benefit to your employees by putting some money toward their insurance costs. It will save you money and still provide a benefit to your employees.
- Do more networking and less paid advertising. The cost will be less and the return will be greater. People buy from people they know. So get out and network with potential clients and referral partners.
- Buy a building with extra room that you can lease out. Your tenants' rent will help cover the costs of your space. And you'll be building equity in your business assets.
- Use subcontractors if you only need part-time help. You only have to pay for labor that you need versus having unbillable bench time. It will also save you money on payroll taxes and insurance.
- Use technology like GoToMeeting.com instead of actually traveling to minimize costs. Travel costs and time can add up quickly.
- Develop payment agreements with your customers to minimize collection costs and uncollectible accounts. It doesn't matter how much you sell if you don't collect. The goal is to have a proactive agreement so that payment terms are very clear and you collect the money owed to you in a timely manner.
- Shop around for your business insurance coverage. It's a high-dollar cost and shopping around will help you save money. The key is to understand the different offerings available from your insurance providers and to conduct a thorough cost-benefit analysis.
Implement these 10 cost-saving measures in your business and you'll begin to see improvements in your bottom-line profitability.