Increase Your Profits Without Cutting Costs Or Increasing Prices

Small businesses are the backbone of the American economy

. Small business accounts for a significant percentage of all the new job creation in the nation. While a surge in sales volume makes good water cooler conversation, any kind of results that do not include an increase in profitability means that you may not be in business much longer. Sadly, too many small businesses are still focusing on making their payrolls rather than on making profits these days. Rather than spending their time and effort into acquiring new customers, these entrepreneurs need to think about squeezing more profits out of the business they already have. Of course, it is not all about working the up sale or cutting overhead. That can turn off customers and drive good employees out the door and in the arms of your competitors.

Achieving and maintaining profitability without cutting costs or increasing prices is an ongoing challenge that small business operators are likely to face every day they are open. To make this happen, the entrepreneur needs to keep himself fully informed about the operating conditions of his organization so that he can make meaningful judgments about what can be done to either improve revenue, minimize waste, or both. Having knowledge of just a handful of creative concepts can make the difference between success and failure in this worthy project. To be sure, fattening your bottom line without either increasing your prices or cutting your expenses will only happen by growing your business while at the time making it more efficient. Both of these goals will challenge your creativity as well as your organizational powers, but, in the end, it will be well worth the effort. In this piece the author will show you where to look to find such opportunities to swell your bottom line.

If you want to show a bigger profit, but are reluctant to raise prices, then it is critical that you start thinking in terms of economy of scale. When your operation is busy all the time you are getting more sales per person-hour, and your fixed costs as a percentage of your sales goes down. Every bit of this extra productivity goes right to the bottom line. The message is as follows: It costs just as much to do $5,000 in sales as it does to do $8,000, so you might as well do the eight. In this same spirit here are more ideas to try:

- Supply Chain Management. Figure out ways to squeeze concessions from your suppliers that do not necessarily involve better pricing. It could be better on-time delivery, or better treatment with respect to returns. All of this helps the bottom line.

- Eliminate unpopular items from your product line.

- Fire your worst costumers. Some customers are a drain on the bottom line, and should be eliminated. This idea works mainly for service type businesses.

- Manage inventory shrinkage. "Shrink" happens through lax loss prevention protocols, and obsolete inventory. Use the best data management tools available to you to control inventory shrinkage.

At the end of the day, gaining increased profitability without increasing prices or cutting costs is about squeezing the inefficiencies out of your operational system. Large corporations call this "Enterprise Resource Management", and the tools that they use to do this cost a pretty penny. You do not need to spend big to duplicate their results. You just have to learn how to think like a big corporation.

by: George Jones

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