How do I drive profit growth for my business?
Every business owner asks this question and the truth is, there are many ways to increase profits and drive your business forward.
However, profit growth becomes more efficient with a focus on the right areas, and with the help of a strategic financial partner, like NOVAA, you’ll start to see your business goals come to fruition.
This article will cover some of the key areas we suggest focusing on to drive profit growth in your business.
Review Your Prices Often
Pricing your products correctly is one of the most influential aspects of generating profit.
Underpricing – apart from the obvious of leading to low profits, conveys the message that your product doesn’t hold as much value as your competitors.
Overpricing pushes customers to your competitors, leads to fewer sales, and stunts growth.
If your goal is to drive profit growth, your first step should be to reevaluate your prices.
You can do this by:
- Comparing your prices to your competitors
- Your prices should reflect industry rates and not be too far above or below your competitors.
- Reviewing your cost of goods sold
- It may cost you more to produce your product now than it did before. If this is the case, you’ll need to raise your prices to reflect this change.
- Talking to your clients/customers
- They will give you the best insight into your prices. Determine what they are willing to pay and go from there.
Remember, adjusting your prices is essential. You won’t be able to drive profits without reviewing your prices and making changes often.
Invest in Your Staff
With every new hire comes the expectation for them to add value to your business, and with value comes profit.
Investing in your staff is often overlooked by business owners but is key to driving profit growth. They assume a competitive salary is enough to attract and retain top talent.
However, this simply isn’t enough if you expect a new employee’s work to make a sizable impact.
Invest in your staff by:
- Offering regular training for tools they use to do their jobs
- Ensuring personal and professional growth opportunities
- Providing a competitive benefits package
- Allowing remote work (when applicable)
- Focus on improving work/life balance
- Explaining how their work matters to the company as a whole
When you invest in your staff you create a healthier work environment, promote mental and physical well-being, and drive profit growth.
Use Data to Make Better Decisions
Your business collects thousands of data on a daily basis. This data can be incredibly useful when used properly, but oftentimes, it’s left to go to waste.
There are three different types of data you can use to help make better business decisions.
- Descriptive data
- This tells you what happened and why.
- Predictive data
- This tells you what will happen if a certain outcome happens.
- Prescriptive data
- This is a way of determining what actions need to be taken for a certain outcome to happen.
These three types of data combined will give you the insight you need to make better decisions and drive profit growth in your business.
Lower Your Expenses
Lowering your expenses goes hand in hand with raising your profits. As you know, lesser costs lead to greater returns.
However, the question often becomes, how do I lower my expenses?
There are a few different things you can do to keep your expenses in check:
- Create and stick to a budget
- Your budgets should be realistic but also challenging. Spending should cover necessary expenses but not be so inclusive that you are spending in places you shouldn’t. Holding yourself accountable to a budget is the best way to manage your expenses.
- Rework vendor contracts
- There may be cheaper vendor options or you may have put in enough time to receive a discount with one of your current vendors. Make sure you check in with them often to see if there are any areas you could be saving.
- Smooth out your operations
- The more time it takes for you to produce and sell your product the more money you are spending. Do what you can to smooth out your operations and increase efficiency. This could mean relying more on automation, improving your production strategy, or selecting better sales channels.
Where there is any opportunity to lower costs, take advantage, this will help drive profit growth.
Drive Profit Growth With the Help of a Strategic Accounting Partner
We understand the steps it takes to increase profitability and will take the time to learn about your business and help you implement new strategies to achieve its unique goals.
Contact NOVAA today to learn more about how we can help you grow your business!