How to increase profit

Increasing profitability often depends on doing many small things, rather than making one big change. Discover how to increase your profit.

Easy ways to increase your profit

There are two fundamental ways to increase your profit: reduce costs or increase sales. For most small businesses, the easiest way to increase profitability is to reduce costs. Reducing costs can dramatically increase the profit you make on each sale; however, the best way to improve profitability is to increase your turnover – there’s a finite limit on reducing your costs, and more room for sales growth.

Ways to cut costs


Identify the steps you can take to minimise your direct costs, such as by negotiating lower prices with your suppliers, reviewing processes and systems to minimise wastage, and implementing additional security to reduce the chance of theft.

Review your supply chain
Most businesses tend to stick to the same supplier, year after year, but you could save a considerable amount of money by renegotiating these deals on a regular basis, or at least keeping an eye on the market. Costs that could be regularly reviewed in your business include insurance, utilities, telephone and Internet.

The best way to reduce indirect costs and overheads is to improve your systems. For example, installing better accounting software could provide you with better, more regular reports that compare your actual costs with budget figures, enabling you to spot unnecessary overhead costs that you can eliminate.

The value of good systems Good systems and processes will help you minimise errors and make it a policy to learn from mistakes and improve your systems as you find ways to work smarter. It’s a good idea to review your systems at least once a year to see where improvements can be made. Don’t forget to seek the input of staff as well to make sure your systems and processes are the best tools for the job.

How to increase your profits

Increasing profitability often depends on doing many small things, rather than making one big change. Discover how to increase your profit.

There are two fundamental ways to increase your profit: reduce costs or increase sales. For most small businesses, the easiest way to increase profitability is to reduce costs. Reducing costs can dramatically increase the profit you make on each sale; however, the best way to improve profitability is to increase your turnover – there’s a finite limit on reducing your costs, and more room for sales growth.