“For most small businesses, the easiest way to increase profitability is to reduce costs. Reducing direct costs can dramatically increase the profit on each sale, and eliminating unnecessary business overheads can have an immediate pleasing impact on your bottom line.
The best way to improve profitability is to increase turnover as there is no limit to sales but there is a limit on reducing your costs.”
The National Australia Bank Group’s advice to it’s business customers. What would you do first; reduce costs or increase profitability? Do you have a choice? In austere times you might well have already pared your costs to the bone and you are likely to be taking on more tasks yourself, jobs that in the past you would have outsourced or employed someone to do. Can you put your prices up to increase profits? Is it likely that you can raise prices in such challenging times?
Business finds itself at the mercy of many challenges and a lot of us have been hanging on for grim death waiting for a turnaround in our market’s fortunes. Is it time to be more innovative, to look to diversify and consider new challenges; maybe enter new markets where we can use our resources and skills to great effect?
Many farmers have seen their gate prices tumble under massive pressure from huge retail operations and many have given up the ghost. Some have looked to new markets such as the rise in popularity of artisan foods and started producing new niche products such as speciality cheeses, yoghurts or meat products. Some farmers have used their land to cater for leisure activities such as hunting, off-road driving or camping.
So what are you going to do if your costs are rising, your resources are crumbling and your margins disappearing? Do you give up or look for new opportunities? I’d love to hear your story.