Chapter 2 – Financial Control – Rule your money
This is part of the ‘How to’ coaching series. An ongoing series of activities to make your business successful. Follow it step by step and see positive results as you develop a robust business model, set on a solid foundation.
Activity 28 – I know how to increase my Gross Profit
Gross profit is the amount of money you have left after sales and costs for those sales. For example, if you sell a service, how much do you sell it for, and how much does it cost to provide that service. Gross Profit does not include your operating costs. Only those costs that you insure each time you provide the service you sold.
So, would you like to know some ways you could increase your gross profit?
The ‘How to’ bit:
One of the easiest ways is to reduce the costs to provide the service or costs of the products you obtain from your suppliers. I managed to reduce the item costs for a product that I used by purchasing a bulk amount directly from the main distributor. This gave me a saving of 30% on the specific item. This equated to several hundred pounds a year. I did this across the range of products I purchased and saved around 25% overall. This allowed me a greater gross profit and, by sharing the reduced costs with my customers, to charge more competitive prices.
Be careful when purchasing bulk products or longer-term services, such as leasing. This can cause issues with your chashflow, storage, or waste of products if they can go off.
Another way is to increase sales, I know, that’s obvious, but how… well, here are a few ideas to increase gross profits…
Use 5 of the 6 ways to focus on individual steps of the sales process. I’ve found that clients see quite an overall improvement in turnover when they do this exercise.
Step 1 – increase number of prospects (this is someone you are actively talking to)
Step 2 – increase number of conversions to customer (get more of your prospects to buy from you)
Step 3 – increase the average sales ticket – sell more to each customer – would you like fries with that?
Step 4 – increase number of purchases – get the customers to come back for more
Step 5 – increase your prices
If you’d like to learn strategies on how to raise your Gross Porfits, and find out the 6th way, follow this link and Contact Us…