If you truly want to transform your business, you need a clear, direct, and measurable strategy to increase your profit.
- Why profits are low for so many businesses – and how to avoid unprofitability
- Four things you can do to increase profits
- The importance of profit strategy
Many Boards make a critical mistake when they try to improve either cash flow or profitability. Instead of creating a strategy, they immediately become bogged down in the details that they think will help them identify expenses, focusing on tactics.
This is a common mistake – and one that rarely improves profits. Instead, you need to take a bigger picture approach, thinking about what you want to strategically achieve when improving profits.
Many businesses experience declines in net profits at various times throughout the life of their business, but short-term loans and cost-cutting can allow them to continue trading. However, in order to survive in the long-term, the Board of Directors will need to identify why profits are shrinking and address these issues before these problems become too large to solve.
Ultimately, four things can improve profits: more sales, more frequent purchases, lower costs, and increased prices. All four of these things can help your profits increase and changing even just one can significantly improve your prospects.
The Essential Guide to Scale-Up Challenges
Learn about how to overcome 16 challenges when scaling up your business
Other strategic challenges you may be facing:
❖ Strategic Funding – external funding is an important part of scaling up. Investors provide the large sum cash injections you need to kickstart your growth. You want to pick the right funding option for where your business is, and make sure you’re investor ready.
❖ Sales, Mergers and Acquisitions – whether selling your business to a larger company or merging with a competitor, these changes are large and complicated. You need to be properly prepared to get the best value for you, as well as making sure the whole process runs as smoothly as possible.
❖ Planning For Exit – exiting a business is an inevitable part of founding one. Eventually, you want to hand over the business you have created. It’s important to prepare for it well in advance and make sure you know how you want this to happen, so you don’t lose time or money trying to exit from a weak position.