Do you want to take quick, easy, and inexpensive action to improve your bottom line? Focus on your margins. This is the quickest and least expensive way to improve immediate profitability.
Margins, like many of the 5 Ways metrics, can be measured, tracked, and improved in a number of ways. Gross Margin is a measure of how much profit is in each sale of a tangible product. For service-based businesses this margin approaches 100%. Net Margin is what’s left over after the bills are paid.
If you’re selling widgets, gross margin can be improved by raising prices, buying in larger quantities to get a price break, changing suppliers, and up to 64 other methods as listed in the book Instant Profits. Net margin is a function of how well fixed and variable costs are controlled. Every improvement to these line items “drops through” to the bottom line. We recommend scrutinizing income statement, balance sheet, and cash flow statements monthly to identify areas for improvement. Every business Owner/Leader should have a great relationship with a trusted insurance agent who can advise on the myriad of coverage options available. Items such as Workers Comp, Property & Casualty, General Liability, Umbrella liability, Health, Life, Dental, Business auto, etc. should be reviewed at least annually to assure proper coverage at competitive rates. Also, check your phone and internet plans as cost savings are usually available here if you pursue it. Remember, what you measure you can manage; what you manage you can change.