5 Ways To Improve Your Business’ Bottom Line
By JD Esajian on November 30, 2016
In any business improving the bottom line is always the bottom line. If your business isn’t profitable any volume you may have or contacts you develop really doesn’t matter. You need to constantly look for ways where you can increase revenue while decreasing expenses. Sometimes in the midst of running a business it is easy to overlook obvious items that are right in front of you. Every thirty days you should take the time to audit your business and see where you can make improvements. By doing this simple exercise alone you can find a handful of simple business tweaks that will make your business more profitable. If you are not constantly focusing on the bottom line you may be throwing money away. Here are five ways you can improve your business bottom line.
- Decrease Overhead. Most businesses have a set of fixed expenses every month. As you look to improve your bottom line you need to start with these costs. It is important not to discard seemingly minor costs like internet, supplies and marketing. It is usually the small expenses that throw your budget for a loop. It is no secret that business has changed dramatically over the past decade. No longer is there a need for a dedicated office space. If you are paying rent you need to evaluate exactly what you are getting from it. Having a downtown address on your business card may sound nice but it can be a waste of money. You can work just as efficiently from your kitchen without paying rent. A big, furnished office may be in your future when you grow your business but until you reach that point you need to keep your overhead as low as possible.
- Monitor Expenses. Lowering your fixed costs is a good start but only a piece of reducing your overall expenses. The simplest formula for improving your bottom line is increasing revenue while lowering expenses. When evaluating expenses you need to take a big picture approach. Many business owners blindly pay their bills every month without really knowing where their money is going. They don’t even read the statement just simply pay the bill online or mail out a check. To get a real feel of your expenses you should print out the statement of whatever account you pay the bills from. Take the time to organize all your monthly payments and see if there is a way these can be reduced. If you are paying a credit card you should look at the interest rate and terms. If you are paying for maintenance on a rental property you should at least look if there is a cheaper alternative. If you are not looking at where your money goes every month you are not giving yourself a chance to save money. Shaving 10% off all your expenses may not seem like much individually but added up can make a big difference.
- Better Deals. It is easy to say that you can increase revenue simply by making more money. This is great in theory but unless you have a plan it probably won’t happen. One of the ways to improve revenue is by pursing better deals. Not every deal you purse will be a home run but there needs to be a minimum amount of profit. By constantly working on deals with little to no margin for error eventually you will get burnt out and disappointed in your results. You can find better deals by being ready to act when they are presented. What you will find is that deals often go to whoever is prepared to act first. Better deals have a larger profit spread and will infuse your business with increased capital. This allows you to pay down high interest bills or find cheaper ways to keep your pipeline filled. Better deals bring increased revenue which in turn improves your bottom line.
- Alternative Sources. Finding better deals can be difficult in certain markets. In areas with increased competition it is not enough to be ready to act. You need to think outside the box and find deals where nobody else is looking. Mobile homes or condos may not be on your radar but they can improve your bottom line. Instead of banging heads with other investors in your area you can create your own niche and get deals at your price. Not having to break the bank for a single family rehab allows you to the option of closing more deals a year and generating more revenue.
- Negotiation. Whatever type of deals you pursue strong negotiation is essential. It is not enough to make your offer and hope for the best. You always need to know where you stand in the negotiation. On certain bank owned property deals you may not have as much leverage as dealing with a homeowner looking for a quick sale. Saving a few thousand dollars on a given deal may not seem like a big accomplishment but added up over several deals a year makes a big difference. Of course you need to know where and when to pick and choose your spots but when you have the advantage you need to take advantage of it through good negotiation.
Everything you do in your business should revolve around your bottom line. If you make a concerted effort to constantly think about your expenses and revenue you will see a sharp improvement.