Measuring your sales and margins provides insight into which parts of your business are performing well and which ones need improvement.
With improved margins, you don’t have to generate as many sales to get the same profit. Better still, lift your margins and achieve higher sales; you’ll get even more on your bottom line!
10 improvement strategies to lift your margins:
1. Set targets and budgets for team members and jobs, and share these with your team.
Have brief weekly meetings to celebrate achievement and share ideas to improve results.
2. Identify the products you sell that have the highest margin.
Share these with the team and make sure they know how to sell them well!
3. Consider products or services that give you a poor return.
Either increase their price or stop selling them. The only exceptions here are ‘loss leaders’ – products or services which bring customers in the door. E.g. milk and bread in a grocery store. Ever noticed how these are always at the back of the store so you’re tempted to buy other items as well?
4. Put your slowest moving stock items on sale and set maximum stock levels.
Slow moving stock or materials ties up your cash.
5. Ensure your pricing includes the cost of consumables, administration time and software.
Adding a simple admin or consumables charge of just $10 to every invoice will make a big difference over a year.
6. Back cost individual jobs or projects.
Then compare the actual results to the quote you provided or the margin you expected from your price list.
7. Keep your price lists current and increase them annually.
If you’re using a pricing tool for quoting, make sure costs are up to date with what you’re being charged by your suppliers.
8. Up-sell and offer options to your customers.
Options give the customer a ‘choice of yeses’ and you’re able to increase your average transaction value; often more return for the same amount of effort.
9. Keep in regular contact with your customers.
Network with them and create opportunities to contact them – or for them to come and see you. More contact will result in more sales. Did you know that it’s six times cheaper to sell to an existing customer than a new one?
10. Use a system or checklist to ensure your sales team knows your product range.
Especially the most profitable items and when to offer them. Give your team members a checklist so that when they scope a job they have add-on offers at front of mind.
Of course, there will be many other specific strategies relevant to your business. Talk to us about creating your margin improvement plan.
“Many receive advice, only the wise profit from it.” – Harper Lee
This information does not constitute financial or legal advice and is for general information purposes only. Please contact DLA Partners for specific advice relating to your particular circumstances.