Want more cash flow, more profits and more financial freedom? The answer is obviously yes or you wouldn’t be in business. That brings me to today’s secret weapon tip, “You Can Increase Your Bottom Line with Less Sales!”
Let me explain. You can absolutely increase your bottom line dramatically by continually analyzing and reviewing your expenses and by increasing the efficiencies of your internal processes without increasing sales by $1.
Here are the key steps I recommend that you should implement immediately:
1) Make sure you prepare a budget or projection for your business. Most companies see this as an added burden that takes too much time to prepare. I see it as an absolute necessity if you want to stay in business and make money. And make sure your projection shows a profit. Remember that you are in business to make money.
2) Keep accurate and pristine books and records. Know exactly what you bring in and what you spend at all times. Your accounting records should be up to date every day. Now I do understand that if you are a one or two person business without a controller or bookkeeper that this is difficult. But you have to make time for this exercise. If you’re the one responsible for keeping the books, I suggest using QuickBooks, which is inexpensive and easy to use. Again, you need to carve out a little time every day to make sure you’re up to date with all transactions.3) At least once a month, review what you’ve spent and compare it to your budget. Are you staying within your budget, are you spending too much? If so, why? This exercise will immediately tell you if you need to make changes and in what areas you need to cut back. Are your material costs increasing? Are your labor costs increasing? Are your utilities more than you thought? Are you making the profit margins you expected to make? Are your marketing costs creating the sales you expected? These are questions that can go unanswered for months and by that time, you’ve lost the potential to save significant dollars.
4)Take action. If your costs are higher than you expected, make the necessary cuts. If they’re in line with what you expected, think of ways to reduce them even further. You’ll discover that when you take the time to think, you’ll come up with ideas that can reduce costs and increase profits immediately.
5) Review your day to day processes and determine what changes you can make to improve the overall efficiency of the company. When you improve the efficiencies in your company, you improve the bottom line as well. As an example, can you automate a particular task that requires paying an employee? Can you upgrade a particular piece of equipment that will pay for itself in a few months and then provide you with a great return thereafter? Again, the key is to make time for you to think.
6) Try to stay current on key industry issues. For example, if you provide a product, stay up to date on any supply issues or potential cost increases. The sooner you can address them, the more prepared you’ll be to take the appropriate actions; And
7) Manage your time. This deserves its own secret weapon tip and it is one issue I plan to address shortly, so stay tuned. For right now, I just want you to understand that there is an inherent cost to your time. It’s invaluable. Whether you pay yourself, $250,000 or $50,000, you must maximize every hour in the day to continue to move your company forward and increase your bottom line.
Remember, sales are important and vital to the growth of your company, but so are managing and controlling your costs.
Mark Luterman is considered by his peers and many businesses around the country to be one of the most UNIQUE entrepreneurs in the industry. His distinctive methods, and techniques create millions of dollars of profits for himself and for the selected companies he chooses to advise.
He is referred to as “The Small Biz Secret Weapon” as many of his most successful clients and prominent accounting and consulting firms sneak him “in the back door”, get his advice and guidance, and then go back to their clients with it.
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