Over the last year or so, the mythical vision of self-employed people wandering about at home, in PJs, sipping coffee and admiring the garden, has been well and truly busted.
Millions have now experienced working from home and know it’s not quite the utopia that popular theory would have us believe.
Running or working a business is hard, involving long hours and a high degree of self-discipline. Especially when the sun is shining and there’s no boss breathing down your neck.
That’s not to say it’s an unrewarding, never-ending grind. Far from it. It can be exciting, liberating and very satisfying. But you’re wearing a lot of hats, and one of the hardest ones to keep in place is the need to watch your profitability.
Here are four solid ways to manage your profit levels, and even give them an uplift.
1: Revisit Your Pricing Strategy
If fewer customers are paying more money, you will benefit in time saved as you’ll effectively be doing less work. Raising prices can be challenging but, statistically speaking, a small increase won’t put off the clients or customers who appreciate your work or service.
Don’t be tempted to join the ‘rush to the bottom’ by constantly trying to undercut your competition. There will always be people charging less, and people charging more. Your key to profit is grasping the value of your product or service and charging appropriately.
This means something different to everyone, but most of us don’t start a business with the aim of growing poorer. So, look at your pricing structure, and if you’re due an uplift (especially if your costs of doing business have risen) adjust your prices accordingly.
2: Increase Your Efficiency
Often, people will see this as meaning they have to work harder or longer hours. It’s not always the case though. Sometimes it’s a way of freeing up time spent on tasks that don’t directly bring in money, so you can do a bit more of the stuff that brings in the profits.
Online retailers, whether you’re selling through auction sites or popular handmade goods sites, could increase efficiency with dedicated business storage. Performing all operations from one central base saves the time you’d spend moving items or travelling between stock and office or computer.
Here’s another example: if you run a service that involves personal appointments, say as a nail technician or a hairdresser, could you install a booking system on your website so you don’t spend as long answering the phone and manually entering appointments into your diary or schedule?
Such a system would benefit customers too, since if they suddenly feel a strong need at midnight to get their hair done, they can go online there and then and book a slot with you.
Meanwhile, you get to see more customers, so you bring in more profit.
3: Lower Your Overheads
Are you paying too much for your business premises? There are ways to spend less on rents while increasing efficiency at the same time.
If you rent an office and your contract is coming up for renewal, or if you’re expanding and on the lookout for affordable business premises, consider investigating flexible offices.
It’s a relatively new concept that cuts a lot of the expense involved in traditional business rentals, while maintaining services and standards.
You can choose an office size to suit, and you’ll have a professional, secure, and private space, on a rolling monthly contract, in a convenient location.
Even if you work from home, you could be paying too much if you’re not claiming all your allowed expenses against income tax. Your accountant or just the HMRC website can advise on which expenses (and how much) you can claim.
4: Use Your Accounts
If you have an accountant, ask him or her to advise on how you can cut costs or improve on your money management.
Accountants see all kinds of business accounting every day, and they understand the finer details of how money works in business. Whether you’re a Sole Trader, or you run a busy operation with several employees, your finance records hold a wealth of information you can use to determine where you’re making profit, where you’re losing money, and how to tighten your purse strings.
If you do your own accounts, use your figures to perform your own analysis. You can sort spending and income into categories to get a broad picture of how money flows through your business, and from there devise a strategy to make it work better.
This isn’t a definitive list of ways to increase your business profits, but they are tried and trusted strategies for an improved bottom line. Whether you’re fighting sinking profits, or you just want to make a bit extra, each one is worth some attention.