There are five strategies for increasing profits.
- Increase sales by 100%. This is real if your main competitors go broke. This situation is unlikely.
- Increase the price of goods by 15%. The chances of this are minimal in the current economic situation.
- Reduce wages by 25%. And here there is a BUT: it is not we who set the wages, but supply and demand.
- Reduce overhead costs by 33%. Think about what business processes can be shortened.
- Reduce procurement costs by 8.5%. Pressure on the supplier, replacement of expensive components (ingredients, components, consumables, etc.) with cheaper ones. Reducing costs on any of these points will double your profits. The last two points are the most realistic tools to date.
We will go over the key costs of the retailer to explain how you can reduce business processes and what to save on.
The Most Important Point
The most important cost is the payment for the item. Unfortunately, in financial analysis, for some reason, this cost is taken out of the box, although it is with it that everything starts. These costs are reduced by increased purchasing power and pressure on the supplier. The pressure on the downstream link is the norm. And do not think that only retail deals with this. The manufacturer presses the supplier when assembling the components; his task is to get deferred payment.
The key point of working with payment for goods is development. The Development Department is the main functional link in dealing with this cost. The more properties you open, the more you diversify your business with this product, the better. Of course, engaging customers like this – GradeMiners.com Announces a $1000 Essay Writing Scholarship Available Until August 1, 2021 –
A Place to Sell Your Products
The second cost is rent. Unfortunately, catering and retail are forced to engage in development. It is not because of the good life that retailers build stores, restaurateurs build catering establishments, and production workers build production sites. In fact, they should not perform this function.
However, this is the market. Despite all the crises, it still belongs to landlords, especially places with a good location. Therefore, among your divisions, there should be a capital construction department that is actively engaged in the development, or, if you do not have such financial capabilities, which is absolutely normal, you should be a key consultant and sell competence when building an object with other developers. This is the only way to reduce this cost.
In urban planning policy, objects suitable for retail, catering, and manufacturing are extremely rarely provided. Therefore, it is best to build an object that suits you. The urban planning standard that will make it possible to do business in the USA should sound something like this: a single-entrance multi-story building should have premises with an area of 400 sq. m, where a store is located on the first floor and a catering or consumer services establishment on the second. Such an urban planning policy will create a surplus of areas, and accordingly, prices for goods will creep down.
For comparison: Walmart (USA) rents its premises for $ 50 per year for 1 sq. m. In Prague, rent is 9 euros per month for 1 sq. m. m. This drop is due to a deliberate urban planning policy. Often enough, rent is offered at half of the initial stake and some percentage of the sales. Why do such proposals come to be? Because the people providing shopping areas have always wanted to have direct income from the market, not the people simply renting.
Of course, if you lead an online service like MasterPapers, then all this turns from a cost/benefits space for clients discussion to a workplace for your employees. Regardless, the points we raised above regarding the landlord tactics still apply.
The Cost of an Employee
The fourth cost is employees and taxes on them. Before opening their own places, many successful business people often work for several months as on-site workers of any business in their preferred field. Then, they calculate just how much funds it takes to have an employee (that might not even be working the full 8 hours).
Doing this will clearly show how much money is spent on employees and probably make it obvious where you can cut your spending. For example, on online platforms like the paper writing service MasterPapers, entrepreneurs usually save a lot by carefully studying which processes can be automated.
The basis of the foundations, where the cost reduction lies, is the change in internal technologies. Analyze internal business processes and think about why so many people work for you. Not downsizing employees for the sake of layoffs, but downsizing business processes for the sake of increasing profits.
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