Edinburgh Accountants Allsquare discuss how to How to Unlock Your Profit Potential to make your business work better for you.
The key to any successful business is turning a profit. After all, without this what would be the point? But this does not just happen by magic and is dependent on several factors. Some of these are universal factors that apply to all businesses, and some are unique or personal to your firm. How you manage these factors will affect the potential profitability of your firm. So what are they and how can you use them to unlock your profit potential?
There are three factors that must be managed in order to help your business to achieve profitability. The first of these is value. In basic terms, what goods or services are you supplying and are they of value to your customers? In order for your business to be profitable, the products or services you supply must have an intrinsic value. The second key factor is that of marketing. This is one of the most important aspects for any business, as without it you will have no way to reach potential customers. If nobody knows about your company or perceives it to have any value, you cannot hope for it to be profitable.
The final universal aspect is that of your business culture. This is harder to manage but refers to how your staff view the purpose of the company and their own role within it. A common goal of achieving profitability is essential for the success of your business.
The first of the factors that is peculiar to your firm’s profitability is the nature of your business. Part of this is dependent on the type of business you choose, as some are naturally more profitable than others. Managing your cash flow effectively is vital. Depending on the type of services or goods you supply, you may have a regular revenue stream, one or two annual busy periods or an erratic cash flow. Managing this to make sure that your business cycle is a regular as possible will help to maximise your profitability.
Environmental factors can also have a huge impact on business success. This refers to elements such as the location of your premises, the proximity of any competitors, the income levels of the local population and the demand for your particular type of business. If there is a need for your products or services in your chosen location, then you are more likely to be profitable.
The last and possibly most important of the unique factors is personal – in other words, the qualities you possess as an entrepreneur. If your leadership and vision are lacking, profitability is likely to be minimal. However, the expert skills and knowledge that you can bring to the business, combined with your drive and passion, can transform your company’s profitability.
The key to making your business successful lies in the effective management of several elements. Some are universal to all businesses, such as effective marketing, whereas others will be specific to each company. Developing comprehensive strategies to handle these will boost the profitability of your firm.