How to increase profit
If you’re looking for ways to increase your profitability then you have to focus your attention on the four profit determining factors: price, volume, variable costs and fixed costs.
Look at each of these factors in terms of:
the factor
what possible action you could take and
what conditions would have to occur to change the outcome?
No single factor can be considered in isolation without considering its impact on the others.
There is no standard success formula. It depends entirely on specific circumstances and the relative strengths and weaknesses of your business.
A favourable change in price and/or your variable costs will improve your gross margin per dollar of sales. Whereas a favourable change in your sales volume and/or your fixed costs will indicate greater productivity. That is, the overheads you incur in running your business are lower per dollar of sales.
Any profit improvement strategy must focus on either (or both) of two things:
Achieving a higher gross margin per dollar of sales by increasing price and/or reducing variable costs and/or
Achieving greater sales per dollar of fixed costs by increasing the productivity of those things which have a fixed cost.
Download the guide on how to increase profit below.
Comments