Improving business profitability is one of the most important goals for leaders. It is also critical to business sustainability and long-term growth. Hence ‘how to improve the profitability of our business?’ is a question that’s constantly asked within business organisations. In fact, with the right information tools and strategies, you can take timely actions to prevent losses and maximise profitability with your existing resources.
Here are a few recommendations that you can consider:
1. Look at your cost
One of the best ways to increase business profitability? Cutting down unnecessary spending! That sounds very straight forward but the challenge here is how to identify these costs. First, find out how effectively your money is spent, and its return on investment.
Then you might want to get rid of the processes or activities that are costing you money and labour but are not adding value to your business. Every penny you saved by eliminating unnecessary costs and activities will contribute directly to your bottom line.
2. Improve inventory visibility
Inventory control is one of the best ways to improve business profitability and the key to avoid additional costs, so the visibility of your stock management is essential. For instance, aged inventory has been a challenge for every dealer group. Having the visibility of the aged vehicle management for timely actions can make a huge difference – are these inventories costing you extra money or are you maximising the value of them?
Good stock management is also essential in pharmacy groups. Implementing scanned stocktake in pharmacy branches and match it with the dispensary data, the management will be able to identify potential dead stock and prevent unnecessary losses.
3. Get your pricing strategy right to maximise the margins
How to improve the profitability of a business? Re-think your pricing strategy and get all the data intelligence you need to make sure you maximise the margins. Increasing the margin doesn’t necessarily mean increasing the price, but often times, if the prices you’re offering are lower than their market value, you’re losing out the profits you could have gained.
For instance, dealers who are operating online used cars business could be losing large number of profits if they’re not pricing their cars correctly. Check out this webinar we recently did with AutoTrader for more details. You’ll also get other equally important tips on how to maximise used cars margins online.
4. Concentrate your sales effort and identify new opportunities
Focus your sales effort on the prospects with the most potential and make sure you maximise the value of each offer. You should also identify your best customers and look for opportunities to upsell. If you are a pharmacy group owner, you might want to check out this blog with a great example – grow your pharmacy profit by growing services.
Another recommendation is to keep an eye on your competitors’ movement and take that into your strategic planning. This is particularly important for pharmacy businesses – if you have visibility of your local competition, you can proactively improve your performance. The data is openly available and published regularly by the NHS, with the right tool you will be able to unveil the hidden stories and get valuable insights out of it to drive growth.
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5. Streamline process and improve productivity
In the first section, we already talked about eliminating unnecessary processes will contribute to your bottom line mainly because of the time saved so your employees can now focus on other high-value tasks. You can improve productivity by introducing better processes or in some cases, implementing robots for automation, which has been seen in some pharmacy businesses already. (Read more: Pharmacy automation: robots rising)
In the auto sector, there are areas in operation where you can improve and will contribute to your profits. A good Vehicle Health Check (VHC) solution is one of those. The complexity of data sources that need to be aggregated is high but once you have the full measurement of your VHC performance, you will be able to maximise productivity and capture all the opportunities.
6. Increase reporting efficiency for timely decision making
Finally, and most importantly, you need an efficient reporting tool to give you visibility on all areas mentioned above and support your timely decision making. If you have the full picture of what’s going on in your business and can drill down to different levels of data – with the help of tools like data analytics or business intelligence (BI) systems, you can easily identify the unnecessary costs and the opportunities you could have missed and leave no cash behind.
Conall Lavery, Co-founder of Real World Analytics pointed out in an interview with MotorTrader that one of the key changes that a good data analytics BI tool can bring to a business organisation is transparency, “without transparency there is a lack of accountability, and stuff just does not get done on time and properly.”
A survey by McKinsey shows how building a strong data-driven culture for company operations and decision making is key to a high-performing organisation’s success. It is also the main differentiator that these organisations are getting ahead of their competitors. With the help of a good data analytics solution that collates data from your multiple sources and give you actionable insights, you can make your decisions and changes with confidence and move towards a more profitable future.
Visit our blog regularly to learn more about business profitability.
