HOW TO MAXIMIZE PROFIT IN BUSINESS BY : BILAL USMAN • WHAT IS PROFIT? • HOW TO MAXIMIZE IT? 1. ASSESS AND REDUCE OPERATING COSTS • Operating expenses, commonly referred to as OPEX, are the costs associated with running a business. • Operating expenses include rent; utilities; equipment and inventory; marketing and advertising; research & development (R&D); selling, general and administrative (SG&A); and payroll. 2. ADJUST PRICING/COST OF GOODS SOLD (COGS) • Adjust price • Although COGS may be decreased immediately by decreasing labor or substituting lessexpensive components or raw materials, again, as with OPEX, consider the long-term implications: Will your production speed or product quality suffer? 3. REVIEW YOUR PRODUCT PORTFOLIO AND PRICING • A good rule of thumb: Before adding a new offering, review your current portfolio. Are products underperforming? • Do you have difficult-to-produce items that are eating away at your margins, time and money? • Would a price decrease of your highest-margin products increase sales? At the same time, don’t be afraid to discontinue products with the lowest margins, or raise their prices. 4. UP-SELL, CROSS-SELL, RESELL • Up-sell • Cross-sell • resell 5. INCREASE CUSTOMER LIFETIME VALUE • Make customer happy • Offer them discount • Offer them coupens and vouchers 6. LOWER YOUR OVERHEAD • For example, say you purchase 21,000 bottle tops every month, and you have three suppliers. To ensure a resilient supply chain, you place an order for 7,000 from each. But supplier A offers 20% off if you purchase 10,000 or more units. By increasing your order to supplier A by 3,000 and decreasing by 1,500 from B and C, you’ve saved 10%. 7. REFINE DEMAND FORECASTS • Planning or predict for future • How much raw material I need in business • Cost to be sold • To forcast whether profit or loss? 8. SELL OFF OLD INVENTORY • Discount • Voucher • Coupen
