Growing a Business and Managing the Growth.

At some point in running your business,
you will think of how to grow your business profits and you really
need to plan if you are to do it in a good progressive manner. Whilst
the actual way you go about this will vary depending on your business
and client profile there are a few considerations below to guide you
in your analysis and to try and identify some pitfalls you may come
across in the process.




Most people instantly think in order to
increase business profits they need to sell more of their goods or
services. Whilst this is one option for increased profits it does not
necessarily transpire that the profits will increase by increasing
your sales. Your costs could increase quicker than the sales because
you may need to increase costs such as marketing expenditure,
staffing costs or premises costs. You may want to sell more products
or services to existing customers for example if you are a bookkeeper
do you also offer the service of payroll calculations for your
clients. Alternatively you may look for new customers to increase the
size of your customer base possibly by opening another office or
shop, advertising for new customers in a new geographic market area.

You may alternatively decide to
increase prices, again this would increase profits if all your
customers still bought the same goods or services from your business
that they would originally have purchased. However, your customers
may move their business or reduce the amount of goods or services
they purchase from you and this could actually lower your profits. In
order to analysis if this is an option go back to some competitor
research and evaluate what the competition are charging for a similar
product or service, look at how your offering varies to the
competition and decide if that adds value that can justify higher
charges

Reducing business costs is also a
viable option, after all, is your sales remain constant or rise and
your expenses go down you will find your profit will increase. The
consideration I would caution here is if you lower costs to your
business will that reduce the quality of goods or services you offer
to your customers. If you reduce staffing in your business will that
lower service standards or speed of service or do you have slack in
your staffing hours that can be reduced. Lower costs for purchased
products that you supply such as stock would hep raise profits but if
the cheaper products are a lower quality would you loose clients.

There is a fine balance between success
and failure in growing your business but if you do all your research
in a comprehensive manner and also more importantly you monitor the
effects of changes very closely as you progress, good bookkeeping
records and management accounts will help you monitor the profits. If
you notice adverse results then you need to re-evaluate your ideas,
they may simply not be working, they may be taking longer to work out
than you were expecting or you may have deviated from your plan but
this re-evaluation will help you refocus and help get you your
desired result to increase your profits.

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