Increase Profitability by Plugging Slow Profit Leaks
One of the most important components of a successful business is its ability to grow by increasing its “earned revenue profitability,” or ERP. Increasing your customer base and altering your transaction sizes are just two of the many ways to do this. The best way to have an immediate and positive impact on the ERP, however, is to stop slow profit leaks, which are inefficiencies within business processes that negatively affect cash flow.
Every business is different and has different areas where slow profit leaks are occurring. There are a few areas in all businesses, however, that are prone to slow profit leaks; we recommend that business owners start with these areas and then move forward accordingly.
Begin by determining what to keep and what to remove. Understand the costs of moving product from freight to inventory, and create diagrams or other visual process flow charts to clarify which products are losing money and which are profitable.
From there, examine company structures and policies. Businesses often implement policies that were originally profitable and may fail to notice when those processes are no longer making money. Functionality is key, not tradition, so continuously updating your business model will keep everything running efficiently. And while continuously updating and being innovative can be scary, good business owners must evolve to move forward.
There are many more ways to fix slow profit leaks and increase your ERP. To access great resources that will teach you more, download our ebook, “How to Plug Those Costly Profit Leaks” or contact Mantralogix directly.