Browsing articles tagged with "profit Archives - paulgreen.biz"

10 Steps To Success In 2012

Mar 1, 2012   //   by paulgreen   //   All Articles  //  No Comments
10 Steps To Success In 2012

10 Steps To Success In 2012

With 2012 upon us and all the doom and gloom in the press about the economy, the Euro and anything else they can come up with a negative slant on to depress us – does all this news actually impact what you are doing and can do for your business?

I think not.

There is still money out there being spent. Mercedes-Benz had record sales in 2011 with an increase in sales of 8% worldwide and Rolls Royce had an increase of 31% in their sales – and neither are the cheapest of cars!

So here are 10 steps for you to consider in order to be successful (or more successful) in your business over the next 12 months:

1. Market – be clear who your ideal target prospect is. This can be based on a number of factors: geography, turnover, number of staff, role, industry sector, etc.

2. Competitive Advantage – what is your USP (Unique Selling Proposition)? What distinguishes you out from your competitors that would compel customers to buy from you?

3. Message – armed with your ideal prospect and USP, you can now focus on your marketing message, being clear about the benefits of why people should do business with you.

4. Method – this refers to the means by which you get your message out to the market. This should be an ongoing process and through multiple channels.

5. Measure – whatever channels you use, make sure you are measuring your return on investment. This enables you to do more of what is working and less of what isn’t.

6. Price – often a contentious point, but on the whole, customers do not buy on price; they are looking for the right value proposition that either provides pleasure for them in some way or that alleviates a pain they have. If you have the right product or service to fulfil the need, price is not an issue.

7. Profit – “profit is sanity, turnover is vanity” – focus on the bottom line, not the headline figure.

8. Cashflow – as mentioned in an earlier article, lack of cash is the biggest threat to a business. Know your income and expenditure looking ahead.

9. Outsource – you are not an expert in everything (no one is), therefore concentrate on what you are good at and what works for your business and outsource other services; either by employing staff or engaging an external service provider.

10. Plan – if you don’t know where you are heading, how do you know when you’ve got there? Write things down in an action based plan with measurable targets in line with the objectives you have for the business.

(This is the much abridged version of the full document – available as a free download here: www.tipsforsuccess.co.uk)

How To Increase Your Profits By 33%

Feb 20, 2012   //   by paulgreen   //   All Articles  //  No Comments
How To Increase Your Profits By 33%

How To Increase Your Profits By 33%

It’s a simple yet common question, “How can I make my business more successful?”

Success can mean a lot of different things to a lot of different people but when it comes down to it, the success of your business should only be measured by one thing – profit.

At the end of the day, it’s not how many people came in to your store or phoned in. It’s not even how many widgets you sold. At the end of the day, what truly matters is how much of a profit you made.

It would make sense then that your efforts focus on profit as the end result.

With that in mind, there are only three strategies to increase profits for your business.

  1. Increase the pound size of each order
  2. Increase the number of times people buy from you
  3. Increase the number of people who buy from you

Most likely, your business is already primed to attack each of these three angles and implementing that attack should be fairly easy.

So, how can you increase the amount of money that someone spends with you?

The classic example of this is “Do you want fries with that?”

Maybe this just means putting your prices up? You may be interested to know that if your profit margin is 40%, putting your price up by 10% could sustain a 20% reduction in sales revenue with no impact to your profit.

(Read more on price increasing)

Secondly, how could you increase the number of times that someone buys from you? Maybe the way to do this is to offer incentives for people, such as special offers or simply by staying in communication with your client and prospect database via newsletters? The more often you are ‘in front‘ of your customer, the higher the chance they will think of you when they need the product or service that you offer.

Finally, how can you increase the number of customers? This is really down to your marketing activity. If you are really clear about your ideal customer and the benefits of doing business with you, the challenge is to get your message out there and attract more custom.

If this seems like a big hurdle, increasing each of these areas by only 10% will impact your profits by 33%.

For example, if you are selling a £10 item to 10 clients 10 times a year and your profit is 10%, that will give you a turnover of £1000 and a profit of £100.

Increasing each by 10%, will increase your turnover to £1,331 and your profit to £133 – a 33% increase overall!

10 Steps To Success in 2012 – Step 7: Profit

Jan 27, 2012   //   by paulgreen   //   Finance  //  No Comments
10 Steps To Success in 2012 - Step 7: Profit

10 Steps To Success in 2012 - Step 7: Profit

No doubt you have heard the expression: “Turnover is vanity, profit is sanity“? There is no point, as a business owner, having a high turnover but only a few pounds profit – or worse still, a loss. Understand the break even point in your business and keep control of your costs; whether it is staff, raw materials, utilities, rates, etc. 

Have regular management accounts generated (at least monthly) by your finance person that provide you with the key financial measures that are important to your business (including a cashflow forecast). 

Knowing where you are in your business from a ‘bottom-line’ perspective enables you to make more informed decisions about the direction of your business. 

Download the full guide: 10 Steps To Success in 2012

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10 Steps To Success in 2012

 

Profits down for British SMEs

Mar 1, 2011   //   by paulgreen   //   Finance  //  No Comments

UK businesses are seeing signs of distress increase across the board, with over half experiencing decreased profits, according to industry trade body R3.

R3′s second quarterly ‘Business Distress Index’, a barometer of financial distress, reveals increased signs of distress in December last year, with ‘decreased profits’ being the leading sign.

R3, the insolvency trade body, surveyed over 500 business owners, 54 per cent of whom recorded decreased profits, an increase of five per cent from September.

Read more: http://www.britishsme.co.uk/2011/02/16/profits-down-for-british-smes/?utm_source=feedburner&utm_medium=twitter&utm_campaign=Feed%3A+BritishSME+%28Britishsme.co.uk+-+Financial+information+for+SMEs%29

Essential Business Advice Tips: Finance

Jan 12, 2011   //   by paulgreen   //   Finance  //  1 Comment
In this article we focus on some of the essential business advice tips that you should consider for your business with regard to finance matters:

 

Cashflow

 

Cash is king for any business and is the main cause of business failure. Knowing where your cash is, what is coming in, what is going out and how much you have is crucial. Ensure that you know how money moves around within your company.

 

Credit Control

 

To support your cashflow, chase invoices before they are due i.e. 7 days before; make sure there are no issues that could cause a delay in settling the invoice and that you are on the payment run. If there are problems, they can be resolved in advance so there is no delay in payment being made to you; or if the client has a problem paying, you can come to a suitable agreement.

 

With regard to creditors, don’t pay too early and negotiate the best terms you can and, if you are having problems paying, communicate with your supplier and see if you can arrange a payment plan to help your cashflow.

 

Management Accounts

 

Often bookkeepers and accountants provide figures that look backwards not forwards and maybe are up to 3 months out of date.

 

Make sure that whoever is producing the finances for you that they are preparing a cashflow forecast looking at the months ahead and that the key parameters for your business are being reported so that you know at least monthly (if not weekly) exactly where you stand.

 

Break Even Point

 

This is the minimum level of sales that you need to make to cover all your business costs and start to get into a profitable situation.

 

Assuming you know your fixed costs (e.g. salaries, rent, rates – often referred to as overheads) and variable costs (these relate to the cost of production and vary with quantity e.g. raw materials) within the business, the simplest way to work this out is as follows:

 

Work out your gross profit (GP) = Total sales – Variable Costs

 

Calculate your GP percentage = Gross Profit ÷ Sales

 

Break Even Point = Fixed Costs ÷ GP Percentage

 

For example, if your sales turnover is £500k, your fixed costs are £100k and your variable costs are £200k:

 

GP = £500k – £200k = £300k

 

GP percentage = £300k ÷ £500k = 60%

 

Break Even Point = £100k ÷ 60% = £167k

 

Funding

 

Are you aware of the various options available to fund your business?

 

An overdraft or loan may not be the most cost effective way and there are a number of other ways of raising capital and improving cashflow for your business: factoring, leasing, asset finance, trade finance, payroll funding, pension funds, business angels, venture capitalists.

 

If you are successful with raising funds for your business, invest it wisely and effectively so that it makes a difference to your business stability and growth (see next page for different sources of funding).

 

Cost Reduction

 

Do you have a handle on the costs in your business particularly for the supply of goods and services? It is worth reviewing at least annually to see where savings can be made or test the market regularly to assess if your suppliers are competitive in the current economic climate.

 

Grants

 

Make sure you are aware of any grants that may be available to your business. You maybe in a particular geographic region where funds are available, or have a specific niche (e.g. waste management, environmental services) where there may be particular specialist grants for your business.

 

There are also streams of funding for research and development, overseas trade, leadership development and you may even be eligible for EU grants. A useful site to search for grants is http://www.grantfinder.co.uk.

 

Profit versus Turnover

 

There is a saying “turnover is vanity, profit is sanity”. What is the point of having millions of pounds of sales revenue but only pounds of profit? Know where and what your costs are to get your product and service to market and if you are actually making any money on the sales that you are making (see Break Even Point above).  Don’t wait for your annual accounts to appear a few months after the year end only to find out you have made a loss!

 

Banks

Are you working with the right bank, one who understands your business and its needs?
Maintain communication with your ‘bank manager’, keep them up to date on what is happening in the business; even if your situation is precarious – the bank will find out eventually. Keeping them ‘on side’ can benefit you if you have difficult decisions to make that may need your bank’s support.

 

Invoicing

Consider increasing the frequency that your invoices are sent out – why wait until the end of the month?
This means you can chase invoices earlier and just before they are due to ensure timely payment and improve your cashflow.
This will depend on the terms and conditions and arrangement that you have with your clients – these can be changed if you think that ‘instant invoicing’ will benefit your business.

 

Capitalization

 

Having enough funds to run the business is key to being successful. Particularly if you are starting a business, if you have no sales for 3 months – will you still be able to fund your marketing activity and other costs in the business?

 

Different Sources Of Funding

 

Below is a bullet point list of the various options available to your business for obtaining funds:

 

Loans
  • Credit cards
  • Overdraft
  • Bank Loans
  • Mortgages
  • Enterprise Finance Guarantee Scheme
Equity Finance
 

  • Business Angels
  • Venture Capital
  • Enterprise Capital Funds
Grants

 

  • R&D tax credits
Asset Backed Finance

 

  • Leasing
  • Factoring
  • Invoice discounting
  • Trade Finance
  • Payroll Finance
  • Pension Fund
Business Relationship Funding

 

  • Joint Ventures
  • Partnerships
  • Joint Working Relationships
  • Agencies
  • Distributors
  • Alliances
  • Trade investors
  • Associates
  • Equity Swap
  • Franchises
  • Licensing

Improve Profits With Innovative Business Ideas

Aug 18, 2010   //   by paulgreen   //   All Articles, Finance  //  1 Comment

Innovative business ideas are key to sustain and improve your business profits.

This ability is needed to stay ahead of competition even as competition responds to the ideas that you implement. How do you keep generating these ideas?

1. Involve in Activities to Trigger Your Mind

Take a walk, go for a swim or read something that will get your creative juices flowing. Just sitting at your desk may not work. Albert Einstein used to day dream in the park. Thomas Edison used to go fishing.

It seems like the mind works best when it is allowed to relax doing something else. Then somehow, it is able to come up with ideas relatively easily as compared to if you sat at your table and tried to force them out.

2. Apply Constraints Last

When generating innovative business ideas, it is important to allow the ideas flow spontaneously. Focus on volume first. Do not worry about the cost, skill or the effort required.

If you applied constraints as you are generating ideas, you will have a tendency of not listing out all possibilities that you can think of.

Only after generating a whole list of ideas, then think through them and prioritise them. Then start looking at the cost, skills required and the effort. How can these be managed in way that the initiative will be profitable.

If the first one does not look like it will be profitable, then move down your list and pick one that will. Any more good ideas left can be filed for future use.

3. Involve Your Staff

Sometimes, the people who carry out the operations are aware of some things that you may not be aware of. Involve these people to generate innovative business ideas.

Brainstorming with the staff will provide you additional ideas that you could use.

The important point about this approach is that your staff will be much more inclined to carry out ideas which they were involved in developing.

4. Do Not Be Afraid to Fail

Having new ideas brings along with it the necessity to implement them. Some people freeze even before they think of any ideas because some previous ideas have failed.

If you fear failure, then it is tough to scale greater heights in your business venture.

Accept that you will fail at times, but there will also be times when you will succeed.

Thomas Edison apparently failed 10,000 times before he got the light bulb working. J. K. Rowling submitted Harry Potter to more than 5 publishers before one decided that it was worth publishing.

You can be assured that the best have had failures. They are but a way to know what doesn’t work.

5. Keep Learning

Learning cannot be restricted to just what we learned at school. It must continue beyond that.

It will, of course, include learning in the area of your business. It should, however, include also learning in other areas. Sometimes, ideas come from an experience in life.

The Internet provides information in a wide variety of areas and is also one place where you can get a lot of information.

Generating innovative business ideas is a must for businesses to stay competitive. Not a question of choice. Try it out if you have not. You will enjoy it more than you think, and be very motivated when some of the ideas start succeeding.

via UK Business Advisors Ltd | UKBA – Articles: Finance – Improve Profits With Innovative Business Ideas.

3 Strategies For Increasing Profits

Aug 18, 2010   //   by paulgreen   //   All Articles, Finance  //  No Comments

It’s a simple yet common question, “How can I make my business more successful?”

Success can mean a lot of different things to a lot of different people but when it comes down to it, the success of your business should only be measured by one thing – profit.

At the end of the day, it’s not how many people came in to your store or phoned in. It’s not even how many widgets you sold. At the end of the day, what truly matters is how much of a profit you made.

It would make sense then that your efforts focus on profit as the end result. With that in mind, there are only three strategies to increase profits for your business.

1) Increase the pound size of each order

2) Increase the number of times people buy from you

3) Increase the number of people who buy from you

Most likely, your business is already primed to attack each of these three angles and implementing that attack should be fairly easy.

Let’s say that you are the owner of Happy Wicks Candle Store. Let your customers know that for every £50 they spend they will receive a free 4-inch candle. When they are eligible for the free candle, offer them the option of upgrading the 4-inch candle to a 6-inch candle for only two pounds.

Implement a customer loyalty program. Whenever a customer spends £200 with your store they receive a 20% discount on their next order. Show loyalty to your customers, too. Create customer-only events and sales, even workshops on how to make candles at home.

Candles are also popular gifts.

Be sure to place your contact info on each and every candle. This makes it easy for the gift recipient to purchase from you. Be sure to also use this tactic when co-promoting with similar businesses such as a flower and bath and body shop.

Looking at the example Happy Wicks Candle Store, the tasks of increasing profits was not a difficult one. Truly, it’s a matter of putting systems in place that generate increasing profits.

Take a look at your business and  examine the systems you have in place.

Chances are, there are undiscovered profits laying about. Put systems in place to gather those profits and you’ll find your business reaching new heights of success.

via UK Business Advisors Ltd | UKBA – Articles: Finance – 3 Strategies For Increasing Profits.

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