Have you ensured the success of your business with profit management?
Too many small businesses fail due to a lack of money, ensuring you analyse your businesses profit and loss statement, and making informed decisions based on that information is essential to the success of your business.
What is Profit Management?
Profitability is the one of the biggest goals (and stresses) when setting up a new venture. Often the path to success isn't straightforward for many small businesses, and even profitable venture may take a turn for the worse.
But, what exactly is profitability? Simply put, profitability is a comparison of how much profit a business makes compared to the overall revenue and costs. A total income of a business that is greater than its expenses, means a business is profitable.
Profit management is understanding your businesses profitability and where the profit is coming from in an effort to drive profit and reduce expenses.
How to Manage Your Profits
In order to increase profitability of a business, you must manage your profits and losses. To successfully manage your profits you first need to create a profit and loss report to fully understand how and where your business makes its money. This understanding will identify what is known as 'profit drivers' in order for you to nurture these to continue to drive the growth of your business, and to make informed decisions about the future of your company.
The next step towards increasing profitability is to create a profit and loss projection, which will forecast the future profitability of your business. A thorough profit management strategy will also include competitor analysis to compare how your products and/or services are priced. Another factor of profit management is to benchmark your profits against previous months and years, in order to compare your current earnings with past achievements.
How can The Finance People help with Profit Management?
Our experienced finance experts have many ways to help you manage your profitability, these include:
Benchmark your key financials - our experts will compare your business costs with competitors in the area to see if you are paying too much, this will include expenses such as rent, utilities and raw materials. Ensuring your business minimises its expenses will drive profitability.
Streamline your inventory - your dedicated finance expert will assist with evaluating your inventory and development a stock control system in order to prevent your business spending valuable profit on unnecessary stock.
Lower direct costs - you can rely on our experts to help negotiate prices where possible and to ensure you are being charged the correct amount by suppliers, ensuring as much profit is made as possible.
Decrease indirect costs - the little things add up in business, so your finance expert can help you to reduce the small avoidable costs, such as untrained staff or wasted supplies.
Increase revenue - our experts have an abundance of knowledge and experience to help you increase your revenue. Methods such as increasing your prices, improving staff productivity or new product lines will be assessed in relation to your business, and our experts will provide the very best advice.
If the thought of managing your businesses profits and losses seems daunting, seek the expert guidance of The Finance People. We have flexible and affordable options for your business, get in touch to discuss your requirements.
How we can help
At The Finance People, we provide flexible and affordable finance expertise to SMEs and startups. Our team of Finance Directors, Finance Managers and Finance Controllers work with your business in line with your requirements - anywhere from 1-3 days per week on a flexible contract. Get in touch to get started.