Increasing profitability - checklist

Increasing profitability - checklistProfitability needs to be the key long-term aim of any business. Follow our helpful tips to ensure you have the best chance of making profits.

  • Ensure managers (and other employees) are focused on profitability, but without losing sight of the need to manage cash flow.
  • Identify the key drivers of profitability - set and monitor key performance indicators (eg sales per employee, gross margin).
  • Avoid distractions. For example, one-off projects which don't play to your strengths or contribute to your strategic goals.
  • Create plans with measurable objectives and set budgets - learn from experience to make continuous improvements.
  • Continually gather market information - build a dialogue with key customers and suppliers.
  • Anticipate the knock-on effects of any changes you plan.
  • Focus on a niche market you understand.
  • Invest in advertising and other promotional techniques such as social media to increase sales volume. Actively sell and deliver a service that builds customer loyalty.
  • Maximise the value of sales. Consider moving upmarket and charging the highest price you can justify for the product - innovate to stay competitive.
  • Focus on your most profitable customers and products.
  • Specify the right quality of supplie and negotiate favourable prices - monitor competing supplier offers.
  • Monitor and control overhead costs and eliminate unnecessary activities.
  • Maximise the cost-effectiveness of assets. Base purchasing on lifetime costs and sell unnecessary assets (or sub-let surplus capacity).
  • Recruit the right employees. Provide a working environment, training and motivation which maximise their effectiveness.
  • Create systems to reduce errors and wasted time. Create policies to reduce the need for managers to repeatedly make the same decisions.
  • Invest in information technology and other labour-saving equipment.
  • Share best practice across the company.

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