Successful companies know their cash flow and develop dependable plans to raise their profits. Business owners aim to offer high-quality service and increase revenue, notwithstanding the operational variations, target market, and customer.
These objectives result in a healthy bottom line which can be redirected into expanding the business, setting up an emergency fund, investing in your community, and other creative ideas projects to grow the business. Conventional activities are in danger as global inflation continues.
The monthly inflation rate in the US has risen from 5% in May 2021 to 8.6% just a year later. Our recent article explored the Inflationary Effects on Wages and Benefits.
What risk-free, expense-reduction strategies should you deploy to improve your bottom line despite the effects? We explore them below:
Hire A Cost Reduction Consultant
Your overhead costs have a considerable influence on your bottom-line prospects. More so, it impacts the quality of your service delivery. Business owners who are not in control of their cash flow will always increase the costs of their goods.
When planning and purchasing, most companies concentrate on where money is spent rather than how it is spent.
That is where Expense To Profit comes in. We are a leading expense reduction consultancy that provides businesses with strategies to reduce overhead costs.
Our audit of annual health insurance premiums of $1.3 million for an organization with 132 employees resulted in $280,000 savings without altering employees, changing brokers, or unloading costs to workers. We have also handled the disposal and haulage of a client’s site, recording a $25,000 cost reduction yearly and over $10,000 recovered for the client. It is a testament to what we do.
We look at your top spend categories, reviewing your current agreements, supply costs, vendors, market research, and invoices. After which, we will provide you with a detailed report with recommendations – without sacrificing product quality. Ninety-one percent (91%) of the favorable outcomes are negotiated with your existing contractors and vendors. So, you do not need to replace them.
Include Complementary Products/Services
Another way you can improve your bottom line is by introducing complementary products or services to your existing ones. You should be looking for products you can sell to increase your order placements.
Here are some common examples:
Movie theaters do not only sell tickets for seeing movies. Their offerings include drinks, popcorn, candy, and even spaces for restaurants and bars. More so, these establishments make provisions for people to reserve special seats in the theater.
Golf courses do not only make people pay for greens fees, charge for a bucket of balls for the range, sell merchandise in their stores, food and drinks in their restaurant lounge.
Football or soccer stadiums sell tickets to their games. But also make provisions for you to buy merchandise, rent spaces for special events, and a restaurant to whet your appetites.
All these add-ons are essential to improving your bottom-line. Not everyone will buy complementary products, but if any of your clients could pay more every time they make an order, it will positively impact your bottom line.
While not Ideal, You Could Adjust Your Pricing
If you are not taking in more revenue, maybe it is time to adjust your pricing. But first things first, you need to determine if it is okay to do so without affecting your service delivery. Also, you need to ascertain how it would effect your customers.
For instance, if your sales are OK, but the earnings are not satisfactory, you could consider an incremental price increase. There is a lot of cost inflation, so it is not uncommon to do so if you are trying to maintain reasonable margins.
If you sell 50 units for $70 and increase the price to $73, your revenue would increase to $109,500 as opposed to $105,000 if you stayed with the original price. The $4,500 in income will help reduce the loss from increased procurement expenses
Costs for delivery have increased dramatically. Many businesses have added a premium to justify that increase to your customers. However, you are likely to have some pushback. Maintaining transparency is essential to retaining existing customers and attracting new ones.
Expense To Profits is not an accountancy firm that helps pay your taxes and invoices; we are an expense reduction consultancy with a strong focus on returning money to your business.
We have a strict policy: If we do not find any savings, we will not accept any fee for our services. It is that simple.
Audit periods last between 4 and 8 weeks, and your company will benefit from improved working conditions and higher profits.
Call today for a free consultation and cost reduction analysis.
Published by Marc Freedman
Marc currently serves as our Chief Cost Evaluator, expertly advising our client management team on how to help you successfully achieve your business and financial growth goals. A respected mentor to all he consults with, he is an avid collaborator and contributor to the spend consultant community, guiding thought leaders to formulate, design, and install the best operational solutions available to their clients.