Whether you’ve opened a new business this summer or have had an established enterprise for generations, “business owners today are still uneasy about our country’s economic stability and the growth of business across Long Island—as well as nationally,” says Michael Berger, CPA, the founder and managing partner of Michael J. Berger and Co., CPA’s LLP.
In addition to dealing with issues from taxes to expenses planning specific to their clients, Berger and his firm have heard a number of questions that can pertain to any business—and have some answers, of course. The following “Basic Strategies for Increased Profits and Strategies for Hard Times” was created in response to those questions because, “in tough times, we all need to go back to basics.”
BASIC STRATEGIES FOR INCREASED PROFITS
1) PRICE: Increasing price can increase profit, but can also reduce volume. Must find happy mix of price and volume.Keep in mind competition and what the market will bear.Look to uniqueness of your product or service and market that uniqueness.
2) VOLUME: Increased volume can increase profit, but is usually accomplished through price reductions.Must find happy mix of price and volume.Do not lower price too much or you cheapen your product, service or image.
3) OVERHEAD: Reducing overhead is usually the easiest and most controllable way of increasing profit.Second-guess all expenditures to determine if they are necessary.Introduce automation where possible.Shop for better price of necessary expenses, but do not forsake quality for cheap prices.
4) PRODUCTIVITY: Increased productivity can increase profit by eliminating extra personnel to accomplish a particular task.Introduce automation where possible.Eliminate overtime where practicable. Hire the right help in the first place.Eliminate employees who pull down the attitude of others, waste time or don’t care.
ADDITIONAL STRATEGIES FOR HARD TIMES
1)COLLECTIONS: Increased cash flow resulting from collecting accounts receivable faster.Reduced exposure to potential bad debts.
2)REFINANCING EXISTING DEBT: Stretching out obligations over a longer period of time to reduce outgoing cash flow.Possible infusion of new funds if cash flow can support repayment.
3)DISPOSING OF NON-PRODUCING ASSETS: Eliminating drain caused by non-income producing assets that can be replaced after cash flow improves due to better economic times.
4)MERGERS AND ACQUISITIONS: Services to increase volume, increase productivity and reduce overhead.Accomplished by reducing two overheads into one.Increased business in lieu of advertising expenditures.Possibly bring on new product lines or new services.Possibly selling part of business.Possibility of taking in active or silent partner.
For more information and questions specific to your business, contact Michael J. Berger and Co., CPAs, LLP, at 631-471-3400, in Greenport at 631-477-0927, or visit them online at bergercpa.com.