.Increased earnings are good, but your business needs to improve your profit margins as well.
If you are running a retail business, for example, Bob Phibbs in his book The Retail Doctor’s Guide to Growing Your Business: A Step-by-Step Approach to Quickly Diagnose, Treat, and Cure recommends some ways you can increase your profit margins:
- Increase prices – not necessarily across the board, but selectively such as the most popular items
- Narrow your focus– you can’t be all things to all people.
- Limit the discounting
- Cut waste and stretch what you have
- Schedule your employees based on the real needs of the business
- No overtime
- Stop scheduling for convenience of employees
- Award extra hours based on merit
- Know how much each staff member actually makes
- Pay bonuses based on the amount of profit, not amount of sales
- Tighten systems and procedures to prevent theft
- Tighten inventory