(Part of our Optimising Profit series.) If you increase your prices by 5% or your volume by 5%, the effect on profit will be quite different. Likewise, if you increase your price by 5% and lose 5% of your volume, will your net profit be the same? (Unlikely). Knowing the key profit drivers for your business is the most critical part of ensuring you have a successful business, but we have found that many business owners and managers are so caught up in the day to day activities, that they never take the time to focus on the big picture. For all businesses, profit comes down to only three things.     1 – Revenue,    2 – Cost of Goods (or Cost of Sales) and    3 – Efficiency of operations. This article will focus on Price vs Volume. Revenue is simply the number of widgets sold multiplied by the widget price. Price …
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The global crisis caused by the COVID-19 pandemic looks like it will be here for a while. While it’s critical we take every precaution to ensure we reduce the spread of infection, there is some other actions we should – or could also be taking. Here’s my take on some key focus points. Keep the wheels turning: Manage your accounts receivable: Use this downturn to build your business: Manage your Duty of Care Keep the wheels turning: Let’s put this into perspective, it is estimated that 18 million deaths a year are caused by poverty around the world. A global recession will impact everyone, and it will impact those in need the most. Here in Australia, casual employees and the self-employed are at the most risk. Many of these are bread winners for young families living week to week. We mustn’t underestimate how essential it is to keep the wheels …
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Efficiency gains from improved systems undoubtedly increases company profits, but did you know that typically it improves customer and staff satisfaction as well. Our experience has shown that good systems, leads to happier staff, suppliers, customers and shareholders. So, it’s a Win / Win / Win / Win situation. To improve your business, invest some time reviewing and documenting your workflow in all parts of the business: It takes a bit of time but it will pay back year after year. Just some of the areas to look at would be Marketing Customer Acquisitions Customer Retention Sales Accounts Receivables Production Shipping etc In theory, business is simple! Company has a product. Company supplies product to customer. Customer gives money to company. What could be easier? Well it never is that easy, is it? There are endless phone calls and emails, marketing activities, quoting, prioritising customers, product requirements to clarify, production …
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