Prime Minister Boris Johnson has announced that all remaining Covid-19 restrictions in the UK will be removed before the end of the month, creating a boost for businesses as they continue their tentative and far from certain recovery.
However, it can be argued that business confidence in the UK was already on the rise, with this metric increasing to 101.57 during the most recent reporting period ending November 2021.
As business growth and confidence returns, companies may also be keen to optimise their profit margins. But what steps can be taken to achieve this?
1. Reduce Operating Expenses
Let’s start with the basics; as core business and operational costs are incredibly influential factors when determining bottom line profit.
So, one way to optimise profit is to carry out a cost audit and determine precisely where you’re spending your business capital. This can include costs such as materials, labour and utilities, as you look to budget your total spending and reduce excessive or unnecessary costs.
Over time, this forensic process can also identify further opportunities to save, leading to incremental gains well into the future.
2. Raise Prices
The other seminal factor impacting profit is the retail price point, which dictates how much customers will spend for a particular product or service. It’s the difference between this sum and your total cost of output (including wholesale prices where possible) that represents your profit, and this remains central to a successful business operation.
So, another way to boost profitability is to raise prices, with this providing a short-term solution over the course of discount drives and limited-time promotions.
However, it’s important that you don’t raise prices beyond a point that the market can bear, while being able to justify this to your customer base and retain genuine value for money.
3. Streamline Your Payment Solutions
Often, businesses can miss out on sales if they fail to offer access to flexible payment solutions, particularly those that are becoming increasingly popular in the digital age.
For example, the volume of card and contactless payments recently superseded cash payments, so it’s imperative that your brick-and-mortar outlets offer these options to customers across the board.
We’d also recommend selling goods and services through online channels, while embracing flexible open banking solutions that allow for seamless and instant payments.
Ultimately, you should offer as broad a range of payments as possible to your customers, in order to capture and incentivise as much of your target market as possible.
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