Increase your profits in 2023

continuing your selling relationship with them. Identify what your customers need or want, based on your industry, and look to provide them with it. Investing a small amount in surveys or questionnaires can reveal what additional products or services your customers need, which you can then offer. You will likely find that other customers on your mailing list will also want this product or service, therefore you can push this to your entire audience. This saves the effort of having to find new customers since you already have a strong existing customer base.

Budget

If increasing sales is not an option, consider ways to reduce operating costs to increase profitability. This can include finding ways to lower the cost of producing your product or service, such as switching to a different manufacturer. Another way to cut costs is to reduce unnecessary subscriptions or negotiate better terms with suppliers for expenses such as rent, phone, and utilities. This will help to keep your expenses low and increase your profit margins.

It may be useful to sit down with your accountant to prepare a full budget for the upcoming year, in which you can benchmark against to find out which areas of your business are eating into your profits.

Will J Blower, Director at Award Winning Accountancy Practice Realise Finance, discusses the ways in which small business owners can increase their profits in 2023.

In recent years, now more than ever, the barriers to running a small business in the UK have ever-so increased. An energy crisis, coupled with consumers reducing their spending habits, topped off by raising interest rates with a lack of stability leaves a recipe for reduced sales across the small business environment.

So, how can you increase your profits? The simple formula for calculating ‘profit’ is ‘income’ minus ‘expenses’. This leaves you with two options, either increase your income or decrease your expenses, to drive a difference between the two figures, in turn generating more profit. We talk through the strategies you could implement to achieve this in your small business:

Diversify

No product/service will sell in its original form forever. Granted, you may have a brilliant niche product but adapting this is the way to develop. For example, you could be running a small farming operation. A poor harvest could result in a lack of sales leaving your turnover lower than expected. Diversifying into a stable industry within your existing business would allow for a recurring income regardless of external factors. For a farm, this would be offering a storage option (making use of unused external buildings) or (with investment) developing something which benefits the local community like a fishing lake. We have seen this first hand, a very adaptive way to increase profits.

Re-sell

You have established a loyal customer base and a positive reputation for your small business. Take advantage of this by

Tax Efficiencies

A quick and easy way for any business to save money is to work with a tax advisor or accountant to minimise tax liability. This can be done by exploring and taking advantage of tax efficiencies such as deductions, credits, and other tax-saving strategies. A tax expert can guide your business through the complex tax laws and regulations and ensure that your company is paying the minimum amount of taxes legally possible. Some examples include:

• Super tax deduction (equipment)

• Pension tax relief

• Ltd company vs Sole Trader analysis

• Trivial Benefits.

Productivity

Identify the activities that generate the most revenue for your business. Business owners often get bogged down with administrative and financial tasks instead of focusing on growing sales and delivering products or services. Prioritise these high-earning tasks, evaluate them in terms of their hourly value, and concentrate on them while outsourcing other tasks at a lower cost. This allows you to increase revenue without significantly increasing costs, which ultimately leads to increased profits and profit margins.

Marketing

Investing in marketing can increase profits by driving sales through increased brand awareness and effective campaigns, reaching target market, differentiating products, and creating customer loyalty. It also provides feedback on what’s working for your business, allowing you to charge a premium for this product/service therefore increasing your profit margins.