Business Management

Are you maximizing your business’ profits?

There may be many options to choose from that can help you improve profitability. Analyse your strengths, weaknesses and capabilities for ways to improve.






Here are a few measures that can have a surprising impact on profitability.


1. Examine key performance measures: Falling sales, shrinking working capital, and rising costs are key indicators to monitor.

2. Manage your costs: more effective purchasing can improve margins. Eliminate waste of materials and time.

3. Review sales to long term customers: you may find out some customers are not as profitable as you thought.

4. Increase productivity: Staffs are the largest cost centre in most businesses. Increasing employee effectiveness can improve profits.

5. Review sales: ensure you are targeting the most profitable customers with the right product mix.
In most cases, a combination of these measures will give a boost to profitability. Incorporate these measures into your business plan and review frequently.

Be diligent and execute, execute, execute.

Need an update to your Business Plan?

Any road will get you there if you don’t know where you are going. Perhaps an updated business plan will help improve your opportunity for choosing the right options when you hit that fork in the road.

Here are a few reasons to update your plan.


1. Cash Flow sensitivity.
Most business owners seem to focus on profits instead of cash. The reality is that businesses spend cash to operate, not profits. Understanding cash flow is critical. If you only get one report to manage the business make sure it is a cash flow chart.

2. To support growth and secure funding
Most businesses face investment decisions during the course of their lifetime. Often, these opportunities cannot be funded by free cash flows alone, and the business must seek external funding. However all prospective lenders will require access to the company’s recent Income Statements/Profit and Loss Statements, along with an up-to-date business plan. In essence the former helps investors understand the past, whereas the business plan helps give them a window on the future.

3. Operational focus
Successful business leaders know that a well-written business plan can provide day-to-day operational assistance. Organizations that stay focused on their business plan have a higher chance of success; when used as a road map, it can help business leaders stay focused on business growth, mission and goals.


4. To support a strategic exit
Finally, at some point, the owners of the firm may decide it is time to exit. Considering the likely exit strategy in advance can help inform and direct present day decisions. The aim is to liquidate the investment, so the owner/current investors have the option of cashing out when they want.
Common exit strategies include;
• Initial Public Offering of stock (IPO’s)
• Acquisition by competitors
• Mergers
• Family succession
• Management buy-outs


Investment decisions can be taken in the present with one eye on the future via a well-thought-out business plan. Given that valuing firms is notoriously difficult and subjective, a well-written plan will clearly highlight the opportunity for the incoming investors, the value of it and increase the likelihood of a successful exit by the current owner.

Improve Business Communication

Poor communication can limit the effectiveness of your organization, even if you operate a small business with just a handful of employees. Without strong communication, deadlines can be missed, work processes can be duplicated and employee morale can suffer. Knowing a few ways to improve communication could benefit your organization.


• Make the Mission and Vision Clear
Take the time to explain the company values and mission, whether as part of corporate training or as a regular reminder to employees. When employees are unified in their understanding of the company goals, they will be able to communicate with one another more effectively in order to reach them.

• Listen
Make a point of actively listening to what your employees have to say, even if you don't always agree or don't think it is relevant to the topic at hand. Showing that you are listening gives the speaker a sense of importance and can make him/her feel respected.

• Communicate honestly
People know when something isn’t adding up. If you try to communicate something that isn’t totally true and honest it will eventually be revealed. It’s difficult to maintain dishonest communication in the workplace because it gets too complicated to hold all of the stories together. Speak the truth and leave the rest for later or don’t say it at all if it’s not true and honest.

• Plan External Events
Create opportunities for employees to meet outside of the office. Nothing hinders communication more than when there are employees in the company who haven’t truly met one another. Plan a holiday party or a happy hour after work. This also gives employees something to look forward to, which can facilitate improved engagement and stronger communication.

Obviously there’s a lot more that can be said about communications in the workplace. These steps may help improve workplace communications. Remember to use daily opportunities to practice your communication skills until you feel comfortable in any situation that arises in the organization.