Like to make more sales in your business?
Selling more of the same stuff to the same people doesn’t always deliver a profit. Consider boosting your profit by analysing which of your products and services are the most profitable, or which ones can be made more profitable.
To do this you need to have good reporting systems in place, so that you can measure the gross profit on different products and services. Once you know this, you can then decide which ones are worthwhile expending resources on to maximize your overall gross and net profit.
Here are a few examples of ‘real’ clients we’ve worked with, where we have improved their ‘top line’… as well as the ‘bottom line’:
Electrical contractor – This client hadn’t increased their hourly charge out rate for the past six years! This was due to their concern they wouldn’t be competitive and win jobs. Their market was starting to pick up a bit, so they agreed they can justify a small increase of $5 per hour. They have 15 staff that are charged out and this small change will add an extra $116,000 onto their bottom line!
By looking at their job management reporting we also discovered some of their staff were not as productive as they could be on jobs. By focusing on improving productivity they are able to get jobs done quicker, which gives them more time to be charging out on other jobs.
Lack of productivity not only costs the hourly rate you pay the staff, it’s an hourly charge out rate you can’t charge another client for that time.
Veterinary Clinic – This client employed quite a few new vets. By analyzing the charge per customer per vet, they were able to identify that some of the newer vets were charging out less than the average amount. Training was provided to these vets to improve their confidence in being able to charge out the right amount for their expertise. The increased charges went straight to the ‘bottom line’.
A transport company was delivering a service to a general type of customer at a less than desirable margin. In order to improve their margin we looked for a more affluent type of customer, who would be prepared to pay more.
Points to consider are
This type of customer demands excellent quality service – could they deliver and what would it cost, and therefore how much did we have to charge to achieve a good margin? We carefully calculated all the costs associated to ensure our price delivered a good profit.
We considered where they were geographically and if there were any obstacles or extra costs to servicing them. These were taken into account in our costing.
We differentiated ourself from our competition by delivering more personalized sales and service. The more time we spent with them the more we found out about what they wanted and the better they could gauge our quality of service. When our quote is received it’s not just one of three from suppliers that they haven’t met.
In these examples an analysis was required to identify what was happening within the business. The analysis comes from good reporting systems. There’s an old saying ‘You can’t manage what you can’t measure’. Systems for measuring are easy to find, with many ‘cloud solutions’ available that cost much less than old fashioned desktop software. Some systems cost as little as $50 per month! In our experience they can deliver hundreds of times their cost back in increased productivity and profit.
The key to benefiting from systems is to ensure they are set up right from the start, to measure the right things. Sometimes professional help is required to get this right and well worth the investment for the future of the business.