10 Ways to Lift Your Margin
Improvements can always be made at the margin – those small tweaks to your process or system that can make a massive difference to the end result. It’s the same with your business margin – a 1% increase in your gross margin on $500k of sales is $5k on your bottom line. The best part about margin improvement, is that you don’t need to lift your sales; often you don’t have to work any harder.
Here are 10 ideas to consider:
- Negotiate better prices with your suppliers – as they say ‘the squeaky wheel gets the oil’ so if you don’t ask you won’t get.
- Update your pricing model – make sure you are using the most recent supplier prices and that all costs are included in your price.
- Back cost at least 2 or 3 jobs every month – in other words review exactly what you spent on those 2 or 3 jobs and compare to what you thought the costs would be when you quoted.
- Get rid of slow moving items or work that has a poor return – selling old stock at cost will drop your margin but if you replace those items or jobs with higher margin items you will achieve a higher return in the long run.
- Set budgets / targets with your team – give them something to aim for and celebrate success.
- Report your results on a cloud based real-time system – you can’t manage what you don’t measure.
- Reduce wastage and rework – set up a project to identify ‘SNUP’ processes that ‘serve no useful purpose.’ Just because you’ve always done it this way, doesn’t mean it’s still necessary.
- Review your sales process – do you offer options to your customers? Do you know how to up-sell to higher margin products? Do you even know what products or services give you the highest margin?
- Make a plan – there are likely to be plenty of other areas for improvement in your business and unless you write them down you’re unlikely to bring the correct focus to them.
- Involve your Accountant – not only to help you build the plan and to help you with idea generation, but also to hold you to account to do the things you agree to do.
Contact us so we can help you.
To improve is to change; to be perfect is to change often – Winston Churchill