When you are in business, it is very easy to focus on sales. But what happens is that the really important figure, net profit, isn’t given the same priority. Although sales are important to a business, net profit is far more important. It is important to manage your business’ profitability in order to stay in business and to grow.
For your business to survive your main focus should be making a profit. By following these simple steps, you will be on your way to do just that:
- Determine which of your products are the most profitable and focus on marketing them more.
- Determine who your loyal customers are and nurture them, as they’re the ones who are likely to stick with you.
- Don’t chase unprofitable customers.
- Pay attention to business expenses – it is very easy for your business expenses to get out of control which could lead to your business making a loss.
- Although it is important to diversify, you must avoid over diversifying, as you could be spending time, money and energy by trying to keep all these streams going. The business streams that make profits are the ones that you should be focusing on.
- Ensure you receive and/or produce performance information and management accounts in a timely manner. This will allow you to take prompt action if required.
- Have a clear direction and vision for your business.
By following these simple steps, you will have a much greater success of running a profitable business.
Sonal Thakkar – Audit Supervisor
Westbury Accountants and Business Advisors is an accountancy practice based in London. Westbury have been providing Accounting and Tax solutions to small and medium sized businesses since 1936. Talk to the team at Westbury on 0207 253 7272 or visit http://www.westbury.co.uk.