How to increase your profits? How to achieve high levels of profitability and cost savings? These questions are asked by managers of not only large but small enterprises. Profit is the main goal of a business venture. It represents the difference between a company's revenues and costs. Thus, to increase profits, you can either increase revenue or reduce the costs of the enterprise.
Cost reduction
To identify reserves for reducing the cost, it is necessary to assess the structure and dynamics of costs, to identify the reason for the deviation of the actual indicators from the planned ones.
Among the measures aimed at reducing the cost, we can name the following:
- reduction of material costs by improving the technological process;
- reduction in fuel and energy consumption;
- introduction of cost rationing;
- increasing the level of technological discipline in production, reducing the cost of marriage;
- increasing the productivity of employees of the enterprise;
- reduction in wage costs by reducing salaries or staff reductions;
- reduction of administrative and management costs.
When implementing all the proposed measures, it must be remembered that cost reduction should not lead to a decrease in the quality of products.
Increase in revenue
Revenue is the total income of the business. This indicator can be increased by increasing the unit price and sales volume.
You should be extremely careful when changing your pricing policy. Most often, commercial enterprises operate in a highly competitive environment. Customer reactions to price increases can be negative. Only large monopoly enterprises can significantly raise the price.
It's easier to manage sales than price. Various methods can be used to increase the indicator. First of all, the assortment policy of the company should be revised. To do this, it is recommended to identify and remove from production goods that are not in demand, and to increase the volume of production of popular goods. You can expand the range by producing related products.
Another effective way to increase sales is to expand the sales geography. Effective work in this direction will allow the company to take a dominant position in the national or international market. You can also stimulate sales of products by conducting an active advertising campaign and changing the approach to merchandising.
