I’m not sure about you, but the never ending cycle of Interest Rate Rises and inflation is not filling me with confidence for a prosperous 2023. I’m hoping we escape the worst of it (as in Australia) it pays to have your risk management plan in place. If you’ve wondered how you will navigate the economic downturn without sacrificing your livelihood, you’re in the right place. Keep reading for my tips on how you can run a lean(er) business with confidence this year.
Identify Your Best Performers
Smart business owners know exactly what product or service is providing the best return on investment (that’s income AND profit), and when wanting to generate sales, they know pulling the sales levers to increase profit is always a great first step. If you aren’t sure which are yours, it’s time to investigate.
Open your sales report and break down how much income you’re making for each product or service. Sift through your offerings and rank them from highest to lowest.
Take it one step further by running a report detailing expenses or the cost of goods related to each product or service – because even though it might be your best seller, is it profitable?!
If your most-popular product/service is not making you any profit or only a little bit, it’s *not* your best performer. Either reduce the cost of providing it OR know your sales levers to lean on and focus on increasing the eyeballs on a profitable area. Is it time to discontinue that product or service . . .
Trim The Fluff
Sift through your expenses and compare them to last year. You might be on track income-wise but could be seeing less $$$ due to the cost of doing business. Cut expenses but ONLY if they hold minimal (or no) value and don’t directly increase your profitability, or your productivity, keeping you on track to meet other goals.
While there’s no one size fits all approach, I suggest starting with the following:
- Subscriptions: Australians waste 4b per year on unused subscriptions. Eeek. Ask yourself what you truly need to operate your business. Can this function be added to one strategically used program to save you from paying for two? Ie: Contracts – Adobe Sign vs Dubsado – which does so much for more you.
- Fees: Multiple bank accounts are great for managing your money – if you’re using them! The cost of running separate accounts for profit, tax, and operating expenses might not be worth it for you. You can save in excess of $120 per year by closing unused accounts.
- Excess Inventory: Inventory is basically money you haven’t made yet. Instead of ordering excess and then discounting to move it (and making little to no profit and lost opportunity with the cash tied up in dead or slow moving stock), order only what you need.
- Marketing: You need to spend money to make money but consider the ROI and what stage you’re at in your business. #HotTip check out this podcast with Maddy Avery from Birdcage Marketing – Do You Make the Digital Marketing Mistakes 99% of Small Business Owners Make?
Productivity For Prosperity
Efficiency is an integral part of running a lean business. The idea is to eliminate waste (time) by optimising processes. You can take this methodology and apply it to your business for ultimate productivity and prosperity.
- Minimise Waste: identify the products, services and subscriptions you don’t need and trim them right back.
- Improve Processes: are you a slave to unnecessary busy work? Doing things a particular way simply because they’ve always been done that way? Times (and technology) have changed dramatically and are always improving. Double-handling electronic files, ineffective systems and ultimately, lost productivity can suck your time and resources.
- Analyse Data: your business metrics will help you reduce costs, improve profits and turbocharge your focus on productivity.
You’ll be running a smoother operation, poised to maximise profit once you clean up your processes and get rid of waste.
Your employees are your most valuable asset. Working IN the business means they likely see things you don’t! The detail is their business, so get their thoughts on processes, waste and ideas to streamline and improve how you do business.
Your employees may have brilliant areas to work on like:
Can you move your advertising spend on Pinterest rather than costly Facebook for a similar ROI? Is the messy warehouse delaying dispatch times? Can you automate canned responses for smoother customer engagement? Is there a way to marry two functions for ultimate efficiency?
You’d be surprised at how much these small tweaks can impact your bottom line! Don’t be afraid to step into unfamiliar territory. The idea is to maximise your efforts, reduce your costs and elevate your productivity. Who knows? The shifting economy might just be your moment of radical change!