After a challenging year, businesses in the East Midlands are optimistic about the future, according to a recent report published by the East Midlands Chamber of Commerce. While trade is expected to pick up as lockdown restrictions continue to ease, it’s important to have a strategic plan in place if you want to maximise your success.
To find out how you can increase your profitability now, take a look at these five top tips:
1. Cut costs
If you can reduce your operating costs without hampering the quality of your products and services, you can effectively boost your profits. When less revenue is being spent on operating costs, more can be retained as profit, which gives you the opportunity to reinvest in the business or maximise your earnings.
However, it’s important to reduce costs in a way that won’t damage your efficiency or productivity levels. Switching to a new supplier in order to reduce costs will only be effective if they can offer the same level of service (or better!) than your previous commercial partners, for example.
2. Reduce your tax liability
Whether you’re operating as a sole trader or a registered company, your tax bill is one thing you can’t avoid. While you may not be able to eradicate your tax bill completely, you can substantially lower your tax liability and reduce the amount you pay to HMRC.
To do this, you’ll want to get bespoke advice from experienced tax accountants. When you work with a larger accountancy firm, you can ensure regulatory compliance and find ways to become more tax efficient.
3. Increase conversions
Achieving higher sales figures seems like an obvious way to increase profitability, but how do you go about optimising your conversion rate? Maximising your marketing return on investment (ROI) may seem difficult at the outset, but it doesn’t have to be.
By using data analytics to assess your current performance, you can determine where and why potential sales are being dropped. Once you have access to the information, you’ll be able to implement effective methods of increasing sales and optimising conversions. By doing so, you can increase your profitability and generate higher revenues.
4. Maximise efficiency
Optimal profitability can only be achieved if your business is operating with maximum efficiency and productivity. By analysing individual workflows as well as team performance, you can determine where time is being lost and how this can be rectified.
Some aspects of your workflows could be automated to increase efficiency, for example, while providing staff with better equipment could enable them to undertake tasks more swiftly. As efficiency increases, you should notice a marked difference in your income and profits too.
5. Expand into new areas
Running a business can mean focusing on a specific geographical area but expanding your organisation gives you the opportunity to drastically increase sales and profits. If you’re a local bricks and mortar retailer, for example, incorporating eCommerce into your business strategy will enable you to sell to customers regionally, nationally or even globally.
Increasing profitability in 2021
There’s no doubt that businesses in the East Midlands, and all over the UK, will want to maximise profitability in 2021 to reduce the economic damage caused by COVID-19. By creating a comprehensive strategy, you can identify your financial goals and set out a clear and straightforward plan to achieve them. Whether you reach new markets, reduce your operating costs or optimise conversions, the right strategy could ensure that 2021 is your most profitable year yet.