Feeling the squeeze on margins? You’re not alone. Rising costs, including wage inflation, higher National Insurance contributions, and increased interest rates, are making it challenging for businesses to maintain healthy profits. The good news is that with a few practical steps, you can take control of your costs, protect your profits, and position your business for sustainable growth.
Keep a close eye on your costs
The first step in managing margins is understanding exactly where your money is going. A monthly review of your costs is incredibly valuable. Take the time to go through your P&L budget line by line and do a variance analysis against your budget. This isn’t just about spotting overspending. It’s about uncovering the reasons behind it.
Assigning ownership to key expense lines can make a significant difference. By putting someone in charge of specific costs, you add accountability and ensure that everyone is focused on managing the numbers. This simple change can lead to meaningful improvements.
Understand your gross profit with job costing
One of the simplest yet most effective tools at your disposal is job costing analysis. This is all about looking at your projects and customers and comparing what you expected to make in gross profit with what you actually made. It’s surprising how many businesses overlook this step.
When you make job costing a regular practice, you’ll not only learn from past projects but also identify opportunities to fine-tune your quoting, production, or delivery. Over time, this will help you improve your processes and your gross profit. Collaboration between sales and operations becomes easier, and your team can focus on delivering better results with every project.
Strengthen your supplier relationships
Reviewing your supplier negotiation strategy can bring fresh opportunities for cost savings. While some suppliers may have limited flexibility, others, especially those where your spending has increased, may be open to renegotiating terms. It’s always worth asking.
Exploring new suppliers can also introduce options that better align with your needs. The goal is not just to save money but to build strong relationships with suppliers who support your long-term goals and can adapt to the needs of your growing business.
Always protect your customer experience
While you’re working on reducing costs and improving processes, one golden rule remains. Never compromise on the customer experience. Your reputation, the quality of your products or services, and your customers’ trust should always come first.
Instead, focus on improving efficiencies in ways that enhance operations without impacting the value your customers receive. By keeping your customers at the heart of every decision, you’ll strengthen your margins while maintaining loyalty and trust.
Building a stronger business
Managing the squeeze on margins doesn’t have to feel overwhelming. By regularly reviewing costs, using job costing to improve decision-making, and refining your supplier negotiation strategy, you’ll uncover opportunities to increase efficiency and strengthen your profits.
Every step you take helps create a more resilient and profitable business. With a proactive approach, you can protect your margins while building a foundation for sustainable growth.
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