If you are a business owner or a senior executive, profitability is your job one. Be sure you know ways to increase profits, fast and easy. Did you know that cutting your expenses by as little as 8% can literally double your profits?
Read on to find out how...
To illustrate, let's look at a typical small business with 50 employees. It averages around $7,000,000 in annual revenue. So, the average revenue per employee is nearly $140,000.
Business profit margins vary by industry and enterprise. For instance, Walmart’s typical net profit margin is just around 3%, compared to Apple’s net profit margin around 24%. To illustrate this example, let's use the average net profit margin in the U.S. That is approximately 7.5% of sales.
So, a typical business with 50 employees that sells about $7 million delivers a net profit of approximately $525,000 ($7m x 7.5%).
0%
$7,000,0000%
$6,400,0000%
$575,000Now, there are only two ways for this business to double its profits:
1) Double Sales Volume
No easy feat. Why not? Because to double sales volume, the company would need to increase expenses to add capacity and overhead to
cover the incremental sales volume.
They would need to as much as double the number of sales reps, facilities, production equipment, insurance, warehousing, advertising, etc. That's because every incremental sales dollar only delivers 7.5 cents to the bottom line profit.
So, to double profit by doubling sales volume, their simplified Income Statement would look like this:
0%
$14,000,000(doubled)
0%
$12,950,000(doubled)
0%
$1,050,000(doubled)
Despair not. There's a better way!
2) Cut Unnecessary Expenses.
Simple, effective, direct, and easy. That's because 100% of every dollar saved on expenses goes straight to bottom-line profit.
So in our example, the company could double its profit by cutting expenses just 8.1%. Their simplified Income Statement would look like this:
0%
$7,000,000(no change)
0%
$5,950,000(reduced 8.1%)
0%
$1,050,0000(doubled)
We help businesses reduce expenses to increase profits. That’s why companies like AT&T, McDonald’s, Walmart, Starbuck’s and Target use our programs. Our clients benefit from a no-cost review of more than 20 potential areas of savings. Since almost 100% of businesses do realize a savings, no fee is charged unless and until savings are realized. A true no risk opportunity.
Care to explore possibilities? Contact Jeff Hastings Today.