7 Clever Ways to Increase Your Bottom Line

Ok. It will come as no surprise that increasing sales will (usually) increase your bottom line. I'm not here to point out the obvious.  I'd like to explore a few less obvious ways to make your company more profitable.

1.  Think about your discounting differently!  There is a difference between the customer's perceived value of a discount and your actual cost. For example, you could sell a $1,000 computer at 20% off.  The customer sees a $200 savings and you see a $200 cut from your bottom line. Conversely, you can offer a free printer/fax/scanner that sells for $200 with the purchase of a $1,000 computer. The customer still sees a $200 savings, but the cost of that scanner might have only been $100...you can do the math from here.

2.  Stop selling low gross profit margin items!  To do this, you first need to invest a little time (if you haven't done so already) to know your profit margins by product.  If you are a restaurant that sells 80 different main entrées, you may be surprised to find that 10% have a profit margin that is much less than the other entrées. Stop selling those low margin items! If you consider the fixed costs, you could be losing money with each sale of these low margin products! 

3.   Take a second look at your vendors! I have found that companies don't like to change vendors because, frankly, it can be a pain.  You know the saying..."No pain, no gain!"  However, I'm not saying you have to switch up your credit card processor, your point of sale system, your payroll provider, your accountant, and all your suppliers in one go.  But, it may be worth it to go to market, see what prices you can get from your vendors' competitors, and then ask your vendors to match it.  You may be surprised in the flexibility your vendors have on price.

4.  Go green! Going paperless can save printer/copy machine, paper, utility, and postage costs!  Offer direct deposit, pay bills online, email rather than snail mail your customers, keep the office 1 degree warmer in the summer, turn off lights and your computer at night.  It all will add up!

5.  Don't be a luddite! Embrace technology! Don't know what I'm talking about? A luddite is a term describing those opposed to, or slow to adopt new technology.  Reduce travel costs by using video conferencing or conference calls where it is reasonable to do so.

6.  Manage your inventory!  I can't stress this enough. You can lose money from obsolete inventory. Monitor your turnover by product line. The way to keep profits high is to keep your turnover as high as possible without risking an inventory shortage. Its a fine line, and the companies that have done the appropriate inventory analysis can walk that line, and they will see higher margins.

7  Follow up on receivables timely! First off, if you are going to offer credit to your customers, do a credit check.  Second, if you have past due accounts, don't be afraid to contact the customer when the account becomes a few days past due!  Give them a call - you don't need to attack them. Tell them you noticed the invoice is past due, given them the benefit of a doubt, and ask if they received the invoice or misplaced it.  If the customer informs you that they can't pay it, offer to help by setting up a payment plan. Don't be shy.

There are many many more ways to increase that bottom line.  Sometimes you have to step back and think outside the box, develop new processes that are more efficient, or simply pass up on buying the brand new designer desk and fancy rug for your office (heaven forbid).

What have you done to increase your bottom line?  I'd love to hear how others have done it!

Please visit my website at www.mytrustedcfo.com to learn more about what I do.