Finance · 26 April 2017

Driving profitability in 2017 means balancing costs and sales

Driving profitability in 2017
Driving profitability in 2017

The vast majority of businesses are always looking for ways to become more profitable – but in reality, this can be something of a balancing act.

Reducing spend is key to driving profitability, but that doesn’t mean compromising on quality. Equally, your prices will determine how profitable your business is, but you must be careful not to price yourself out of the market.

To help small businesses navigate this difficult balancing act, KPMG Small Business Accounting has put together a guide to cutting costs and driving sales.

It’s all about finding the best services for the best price, and marketing your goods at the optimal price points. If that sounds tricky, here are some pointers to help you get started.

Reduce your business costs

You need to understand your business costs, and be able to spot it early if they are rising significantly. Is money being wasted, could you get better deals elsewhere?

Try speaking to your staff as those running the day-to-day operations might have valuable insights to offer.

You can also consider implementing bookkeeping software to keep track of the numbers for you.

Getting better value

Some businesses can be guilty of sticking with the same suppliers because of an existing relationship, or because it’s just less hassle to switch. Try not to disregard alternatives that can offer the same level of service at a lower price – it might take a little effort, but it will pay off.

That said, try not to focus exclusively on price. Customer service is also important, and you might regret taking the cheapest option if you are continually let down.

Getting the sales

Some business owners find profit margins shrinking over time as costs increase but prices for their goods and services stay the same.

It’s understandable that businesses are reluctant to increase prices for fear of losing customer loyalty, but sometimes there’s no getting away from it. Keep an eye on what your competitors are charging and communicate any price increases clearly to customers.

In addition, you should always be on the lookout for ways to sell more – whether that’s developing new products, or casting a wider net for customers.

For more information on improving the profitability of your business and walking that tight rope between costs and sales, take a look at this guide from KPMG Small Business Accounting.

Sign up to our newsletter to get the latest from Business Advice.


 
TAGS:

ABOUT THE EXPERT

Letitia Booty is a special projects journalist for Business Advice. She has a BA in English Literature from the University of East Anglia, and since graduating she has written for a variety of trade titles. Most recently, she was a reporter at SME magazine.

Q&A

If you’ve found the article above useful, but have a more detailed and bespoke question, then please feel free to submit a query to our expert. We at Business Advice will get in contact with them on your behalf and arrange for a personalised response. These questions and answers will then be collated on the site for any other readers who have similar queries.

Ask a question

On the up

Find out how KPMG Small Business Accounting can really work for you

FIND OUT MORE