5 simple things you can do to improve your business's profitability
Different businesses have different objectives, but one target is always true –– profit. The main goal of a company is to produce a surplus in revenue, and this could be the difference between an organisation succeeding or failing. In other words, the bottom line is always, well, the bottom line.
During the COVID-19 pandemic, we’ve seen many companies flourish and others sink, and it’s impacted almost every business under the sun –– from hospitality and retail, all the way to tech and finance. In these trying times, re-evaluating where your operations might be eating into your margins is important. This can help you identify the simple tweaks to correct them, streamline your processes and create profit. Here are just a few examples.
1. Uphold accurate timesheets
We’re going to start with something elementary — timesheets. You’ll be surprised by how many businesses can save money if they just dealt with timesheets correctly. While no employee likes to track their working hours as it may feel like they’re being micromanaged, overcoming this can be beneficial. Managing timesheets efficiently and accurately prevents over- or under-charging clients, which in turn means repeat business and better customer success.
In order to do so, you’d need to make sure that your workers know what is expected of them. Providing a time-tracking process is a great place to start. Clarify to staff how they should track their time –– do they clock in at the start of the day and out at the end, or are they required to keep tabs on the time it takes them to complete each task? Are meetings marked differently to individual work? And what is the format they should use? This is information you should provide employees with, but the best way to solve inconsistencies is to opt for a timesheet app that’s exactly where time is being used and whether it’s effective usage. There are plenty of good ones to choose from, from comprehensive resource management apps like Precursive, or budget-focused time tracking software like Everhour.
2. Focus on client retention
Businesses tend to spend an inordinate amount of time, money and organisational resources on amassing new clients. This is seemingly good practice –– the more clients you have, the more revenue you produce. It’s a simple equation. Or so it seems. However, the truth is a little more nuanced than that. Companies should focus on retaining the clients they already have rather than try to exponentially grow their portfolio.
Yoav Vilner, an advisor and external CMO, told Forbes that “retaining and nurturing existing clients had much better ROI than on-boarding new ones because you already have existing manpower dedicating time on these operations.” He goes on to say that receiving first profits from a new client is much more time-consuming. Losing clients is a recipe for quick losses, and it can be avoided on countless occasions with a bit of dedication. In fact, even a mere 5% increase in retention can boost profits by up to 95%.
3. Avoid high employee turnover
The same principle applies to your own workforce. The cost of replacing an employee alone is about 2.5x their salary. When you add up other related costs, such as the financial impact of lowered productivity and engagement, as well as training costs and the cultural impact on the company, employee turnover becomes a pricey business.
Of course, seeing as an average person has 12 jobs in their lifetime, it’s likely your staff will leave your company at some point. As a supportive boss, it’s not such a bad thing to let them progress in their career when their time at your company has reached saturation. However, finding new talent is not only expensive, it’s also hard –– so you want to do everything in your power to ensure your staff remain loyal to your business. The best ways to do this are to provide clear routes for progression and education, put an emphasis on company culture, and focus on increasing engagement.
4. Re-evaluate your workflows and processes
Every business has its own way of doing things. Unfortunately, for many companies, and especially smaller ventures, processes such as onboarding, information tracking or reviewing documents can often emerge spontaneously out of necessity rather than from a rigorous examination of your business and employee needs. This means that by re-evaluating these processes, a lot of your procedures and operations can be made significantly more streamlined to help your organisation save time and money.
You may want to utilise technology that can help you with this restructuring, such as Robotic Process Automation (RPA), which uses AI to minimise repetitive tasks and conduct analyses and calculations. If you’ve never evaluated your workflows before, try to focus on a few areas and go from there. We suggest drilling into the hiring, sales and financial processes first as they are usually the ones that require the most improvement. However, you can always ask your staff what they think needs immediate attention.
5. Give regular feedback
There is no better way to grow than to learn from mistakes. Consistent feedback allows employees to have a clear idea of what’s expected of them, understand how they’re performing, and learn what they can do to improve. This doesn’t only have the desired effect of helping them evolve along with its impact on their work and productivity, but it also fosters a culture of open communication which is critical for business success. When 79% of employees believe they aren’t receiving enough feedback at work, this is something that almost every company can revamp.
Bear in mind that it’s not just about the existence of assessments –– it’s about how you do them. You want to give honest and constructive criticism, free of ego, with the intention of assisting improvement and development. For that purpose, it’s always useful to present data to back what you’re saying and allow for a flow of ideas –– the feedback process is a two-way street.
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