Keeping your company’s bottom line in check is no easy feat. There are many variables that go into the success of your business—from the amount of cash you have to how efficiently you spend your resources. However, with a little forethought and planning, it’s not difficult to keep tabs on your company’s financial health and stay on top of its financial performance. By using a variety of strategies to improve your company’s bottom line, you can ensure that you remain profitable while still keeping track of how much cash remains in your company’s treasury at any given time. Addressing these challenges requires working towards a few goals simultaneously: operating efficiently, being profitable, and being productive while doing so. Let’s take a look at 6 ways that companies can improve their performance by increasing profitability and efficiency while maintaining operational control.
Clearly Define Your Bottom Line
In addition to optimizing your costs, you must also make sure that the money you’re spending is actually getting you the goods and services that you desire. Let’s say you own a furniture store that primarily sells office furniture. You might try to bill your customers according to the square footage of their office, but this isn’t always the best use of your financial resources. When you clearly define your bottom line, you can then look at each expense within your company and see what can be more efficiently spent elsewhere. By identifying which expenses are non-core, you can ensure that your company is spending its money more wisely.
Optimize your Cost Structure
Many owners fail to optimize their costs because they don’t know where to begin. By following a few simple tips, you can ensure that your organization spends money more efficiently. First, your operational expenses should make up only 25% or less of your sales. Next, your administrative expenses should make up the remaining 75% or less of your sales. These expenses should then be distributed evenly throughout your company, based on each employee’s production rate. Finally, your marketing expenses should make up the remaining 25% or less of your sales.
Be Proactive with your Customer Service
Having a system in place that automatically bills your customers is a great way to stay organized. However, it’s important to proactively address customer service issues so that they don’t pop up months or years later. During every interaction you have with your customers, try to be as helpful and action-oriented as possible. This might mean immediately sending an email to an issue that you’ve been dealing with for a while, rather than attempting to solve it in-person. Making a habit out of being proactive with your customer service can help you stay on top of issues and quickly address them. You’ll also feel much more satisfied with each transaction that you have with a customer, and this will show up in your company’s bottom line.
Continually Adjust your Pricing strategy
Pricing is always a balancing act. You want to charge what you’re worth, but you also don’t want to overcharge your customer. Pricing can be challenging, but it doesn’t have to be a chore. By continuously adjusting your pricing strategy, you can stay on top of your product and customer expectations while still maintaining profitability. You can start adjusting your pricing once you’ve determined the cost of your goods and services. Next, use that data to create a new pricing strategy for your overall company. Then, keep adjusting your pricing until you achieve your goal of profitability.
Always have the best Product on the Market
Your company’s bottom line is directly tied to the quality of the products that you sell. If your product isn’t the best available on the market, you’ll struggle to remain profitable. To have a chance at success, you must always be investing time and money into the development of a top-notch product. No matter how profitable your company is, if you don’t have the resources to develop a new product, you won’t be able to keep up with the competition. If your company’s product isn’t good enough to stand out from the rest, your bottom line will suffer. There are a few ways that you can ensure that your product remains at the top of its game.
Finally, don’t forget to keep your eyes on the prize. If you increase your profitability and efficiency by using these strategies, your bottom line will continue to grow.