The first quarter of the year is an excellent time to evaluate where you currently stand and adjust certain factors to maximize your profit and increase your bottom line. If you’re barely breaking even, it’s time to get real and make some changes to secure a successful future for your business. Even if you’re happy with last year’s revenue, there are likely still some adjustments you can make to exceed expectations and ensure solvency for years to come.
Contrary to popular belief, cutting costs doesn’t need to mean you have to sacrifice the quality of your products or services. All it takes is a smart approach to financing your business’ overhead and cost of goods to see more green in your future.
No matter where you stand, here are a few strategies that will help you reassess, refine, and refresh your business operations to increase your profit margins in 2020.
Assess your pricing structure with context
Overcharging your clients won’t get you very far, but undercharging is just as damaging to your bottom line. Your prices should be fair, but there’s no way for you to know what that is without looking at the greater market.
Get a feel for competitive pricing structures in your local market, as well as those on a national level (especially if you cater to clients outside of your area). There is usually a comfortable range in which you can justifiably increase your prices without fear of overcharging and underdelivering. Just avoid pricing out of your competition, which will inevitably lead to operating at a loss.
Eliminate waste as much as possible
When it all boils down, wasting your resources is akin to throwing money down the drain. It does no one any good to throw away valuable assets that you’ve paid for, so avoid it at all costs.
This applies to any field in the events industry. Caterers can find ways to preserve perishable ingredients or simply buy less if they aren’t using up all of their stock. Rental companies can use the repair skills of a contractor or in-house employee to keep their inventory in use. Stationers can be more efficient in their use of paper and accessories or find ways to recycle their resources. Keep an eye on what’s going in the trash or what is left unused, then find a solution to minimize the waste as much as possible.
Trim back on expenses where you can
Take a moment to consider your client experience. If you’re shelling out for the premium level of everything, how much does that serve your clients? In most cases, you’ll find that there are some things that you just don’t need to invest in. Take catering, for example. There are certainly things worth their weight in gold, like prime cuts of meat, fish and seafood, and organic vegetables when they star in a dish. However, we don’t need to spend extra money to ensure that our herbs were organically sourced from a micro-farm three time zones away, especially considering they end up ground up and served in sauces and marinades.
Consider the aspects of your products or services that tend to be “under the radar” and wouldn’t change the end result if you scaled back a bit. You don’t want to cut anything that the customer wants or expects, but things like disposables, paper products, and other secondary resources can be a great place to save some pennies (which add up in the long term).
A sustainable and solvent company must have a healthy profit margin to continue achieving success. If you see room for improvement, start to be more mindful of your everyday expenses and seek out cost-cutting alternatives that won’t sacrifice the quality of your end product.
Clint Elkins is the V.P. of Sales for SB Value, a Group Purchasing Organization that helps culinary professionals save an average of 16% on every food order. Membership is 100% free. No hidden fees. No extra work. Just extra profits. See how much you can save on your next food order when you become an SB Value member. Request a quote today.