Efficiency is probably one of the most overlooked areas to building and sustaining a profitable business. Yet, it has so much potential for making a positive impact on your bottom line. Consider these 5 ways to increase the efficiency of your business.
1. Control Or Reduce Expenses
Getting a handle on where your money is going is critical. Most businesses have an incredible amount of waste, not only in actual money lost, but in human capital – lost or wasted time by their employees and staff. You need to keep a very tight reign over any expenditures, and money should only be spent after careful consideration and analysis as to how it will contribute to your bottom line profits.
One of the biggest money wasters is the area of advertising and marketing. Careful testing of ads and promotions should be carried out in small runs before “rolling out” to your entire list or to the marketplace. Direct response ads with enticing and compelling offers should always be used in place of more traditional image or institutional ads. When you consider how much it “costs” to bring in a dollar of actual profit and then see how easy it is to spend that money and not get a positive return, it’s not hard to see why so many businesses have a difficult time showing a positive balance at the end of the year.
2. Increase Profit Margins
Profit margins are the difference between what the product or service you offer costs you to make, produce, purchase, or acquire, versus what you sell it for, and after deducting sales, processing, fulfillment, and delivery costs. The more steps there are in the process from production or acquisition to delivery, the more room there is for excess costs to creep in, and the lower the profit margin will be. Every effort should be made to monitor, control and slash costs whenever possible. Remember, a simple two-dollar savings on a twenty dollar product can add up to 20 percent more profit for your business.
3. Manage Time More Effectively
Every person on the face of the earth has exactly the same number of hours, minutes and seconds in their day – every day. No one has an advantage in this area. It’s true that we all have different jobs, tasks, priorities, and responsibilities, and those all require different amounts of our time, but you can significantly increase your available time if you will take stock of where you are, what you’re spending your time on, and then effectively employ the principle of delegation.
By concentrating on things that matter most, or that only you can do, and then delegating the lesser important tasks to the lowest competency level person that can handle them, you’ll have more time to focus on the important priorities – the things that can make you real money.
4. Increase The Knowledge And Competence Of Your Staff
How many times have you contacted a business and asked a question, only to have the person on the other end act like they had no idea of what you were talking about or where to get the answer? It happens all the time.
Knowing how to hire the right employees is critical, as well as how they’re trained to handle different situations that come up in your business. It’s surprising how few businesses have regular staff or employee training meetings. And for those who do, most of their meetings have to do with administrative duties, and are “reactive” in their approach. By changing your focus and conducting “proactive” meetings – how to deal with certain situations, sell more effectively, show interest in customers, and so on., will do a lot to not only improve your company’s image, but will also be a contributing factor to your profitability.
5. Create A Teamwork Approach
You cannot afford to run your businesses with a “super star” mentality. Just as in any team sport, to be truly effective, it takes the entire team to make a company run smoothly and efficiently. Want to know how to make your company more responsive to the needs of your customers? Hold a team meeting. Invite people from every department – sales, manufacturing, accounting, fulfillment, delivery, even janitorial. Have a brainstorming session and get every idea possible on the table. Don’t be judgmental. Get them all out. Then go through each idea and discuss how it can be used to more fully satisfy the needs of your customers. Sometimes the best ideas come from those you’d least expect.