Owning a company and running one is no easy feat. Competition is everywhere and there are so many things you need to stay on top of to ensure that you make ends meet. Not only for yourself, but for the rest of your team as well.
Sometimes, because business owners are so worried and focused on the top line of growing, they might spend too much money and even if you think you’re making money, you might not be making a profit. This happens when business owners do not focus on the profit and loss sheets. It is not anyone’s fault, but it is something that business owners might forget since they are focusing on so many other components of dealing with a company.
Number 1 : Find Out Your Gross Profit Margin
This is something you need to do at the start to ensure you have something to back your results on. You need to make sure that it is up-to-date and that it’s a properly calculated gross profit margin. If you just go around and doing it based on guesswork, you will never be able to maintain a good profit margin. Also, this will also allow you to know just how much your business is making and what it can make in the future.
Number 2 : Reviewing All Prices of Your Services
Hold up, just hear us out first. When you’re running your business, you might forget to actually look at and review the prices of all your products and services. You might be worried if you need to increase or decrease the prices of your services. It is true that customers might be shocked when it comes to changing of prices. However, inflation is a real thing and it will affect you sooner or later. Especially with the new Sales and Service Tax that come into play recently, the basic overhead cost of running your business will increase. If you don’t restructure your prices, you might miss out on cash and profits . You need to make sure that you analyse supplier prices, the inflation rates and the number of customers you get on a monthly basis. These numbers need to be calculated carefully to then make the decision of how much your prices will change.
Number 3 : Stop Competing on Price
It might be an innate response to always match the price or be lower than your competition to ensure you stay relevant. But, this way, there will always be someone cheaper than you and the cheaper you go, the thinner your profit margin. Instead, differentiate yourself with different things. Add value to your service. People pay for convenience and good service.
Number 4 : Try Not To Run Discounts
Unless it is shopping season, don’t just give out discounts all the time. It might turn your company around badly if you give out discounts a lot. In addition to that, sometimes when your sales teams allows a discount, you haven’t made the appropriate calculations for your profit and loss sheet for that month. If you’re not being careful, your already thin margins might just be thinned out completely. If you want to give out discounts, just ensure that you have made the appropriate calculations and the number of sales and profit you will get, will be able compensate for the discounts themselves.
Number 5 : Review Your Vendors and Orders
To maintain your business, you need to always check up on what your outgoing expenditures are being spent on. If some vendors are hiking their prices up, you need to be able to check up on them often and also ensure that your own finances are being protected. However, you could also combine orders if you can, this way if you order in bulk or if you combine them, then you will be able to save money in the long run. If you order once in a while or buy less than the bulk order, you will be losing out on money every month that you could be saving.
When it comes the time to send in your financial reports to SSM at the end of your financial year, you need to have someone certified to submit the profit and loss as well as your financial statements. To ensure your team is certified and experienced to use the MBRS tool, you can register for the workshops here.