Profit margins are generally an indicator of a company’s pricing policy, and how well it controls costs. As our economy slows and the market continues to change, many business owners are struggling to maintain their profit margins.
There are several challenges facing businesses when it comes to increasing profit margins. But, lucky for you, there are also ways to overcome them!
The key challenges business owners are facing when it comes to profit margins can be broken down into two major areas:
Increased price competition
Smaller businesses often find it difficult to keep up with major players when it comes to the ‘lowest price.’ Especially if you are operating in a market where customers value a cheaper product over quality.
Staffing, capital expenditure and overheads – they all seem to be rising in cost for business owners.
The 2018 SME business report from Bstar found that businesses are trying to combat these challenges through increased efficiency and productivity.
Smarter, not harder
The report showed business owners are working to increase their own expertise, by seeking external support from professional advisers.
The key to increased efficiency is to identify areas that can be improved and eliminate what is unnecessary. A professional advisor can help you identify inefficient processes in your current business model. They can also help you devise a plan outlining what needs to be done to achieve your goals.
Automation is a key factor in efficiency.
Technology is much cheaper and easier to use these days. You can automate many tasks especially finance ones like:
This will save time in administration which either reduces your labour costs or gives you back time to spend on more productive tasks.
Talk to the team at DFK Everalls as they can point you in the right direction and help you select and implement software and other processes to boost your business’ efficiency.
Confidence and accountability
Success can be measured in many ways. The report observed two key constants in the successful approach to implementing change were confidence and accountability.
Confidence is needed to maintain the effort and to overcome resistance to change.
Business owners need to believe in their goals and trust in the plan to reach them, if they are to make changes to their business model.
Accountability is the key to successful implementation. Plans only work when individuals take responsibility for making it happen.
Profit Improvement Programs
Advisers are helping small and medium-sized enterprises with solutions to tackle the challenges of maintaining cash flow and ensuring strong profit margins.
Profit is a measure how well your business is doing. Our Profit Improvement Program (PIP) helps business owners to stay on track with their plans and achieve their goals.
The program provides you with an analysis of how well your business is performing against your industry’s benchmarks. It also provides you with a 12 month plan on how to improve your profit.
Contact us today to sit down with one of our business advisors, so we can help you tackle your challenges head on.