How to make profit on a day-to-day basis

||

SMEs sometimes struggle because their takings and outgoings every day fluctuate so vastly. A very good day, week or month could immediately be cancelled out by a loss-making one, or it could be that you come to rely on high-profit days to recover from lean spells. Ups and downs are a great vexation to company directors, and their ultimate aim will always be to run a business that makes a profit every day.

Of course, this is easier said than done, but if you are serious about it, it can be achieved. Here are some ways to set about the task:

Find out how much profit you make now

The first step, if you don’t know it already, is to work out your profitability at the moment, and analyse it on a day-to-day basis. Look into particularly poor spells and see if you can work out what went wrong. You should see patterns emerging in terms of where you are gaining and losing money.

The role of a financial director really comes into its own here, with an outsourced accounting function like Sollertia able to work with you to give astute advice on where and how you could be making more profit.

Realise the importance of deadlines

Day-to-day figures can be distorted by matters like late or partially received payments. A good way to make sure that money comes in and goes out of your business as and when you expect is to take a regimented approach.

Set deadlines and stick to them – don’t try to impress a bidder by promising to complete work or orders within an unrealistic time frame. They will appreciate it more if you’re honest about how long it will take you to do the job as well as you can.

Also, make sure your clients and customers are fully informed on when they need to pay. If you become lax with them and let them get into the habit of paying late, you’re likely to start seeing erroneous figures in your books.

Go to war on waste

Companies regularly shell out more than they need to on supplies and raw material. With the Internet so much a part of our lives, it’s never been easier to shop around for better prices.

A popular target among businesses is to aim to lower the amount they spend on supplies by 5% every year, but why stop there? It’s better to lower it by 10% one year and not at all the next than it is to achieve 5% for two years in succession.