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How to add 50% to your profit (this is not a scam)

By Stuart McLaren on Tue 26 May 2015 in CRM

Ok, stick with me on this one, it really is not a scam…

In an ideal world we all want our profit to grow whilst keeping our running costs down. This might seem like a long shot, but actually if you can review your processes and work out where you can become more efficient it is possible. The difficult bit is increasing the amount of business that you are doing without it costing loads more to do it.

Actually in our experience the reason businesses aren’t making as much profit as they should be is down to inefficiencies.

Fix this and your profit will grow.

Underlying costs of being inefficient

  • Cost of rekeying – 1 in 5 SMEs have forgotten to invoice for goods/services at least once. 25% of these were for jobs and services worth between £5,000 and £10,000, and 6% were for jobs and services worth over £10,000!
  • Cost of intangibles – Not only will mistakes such as rekeying cost the business actual money, but it will be as equally damaging to your relationships with your customers and your reputation.
  • Cost of human error (mistakes) – A recent study conducted in January 2015 found that 47% of UK SMEs considered time-wasting the biggest challenge. This was closely followed by the risk of human error at 45%. Traceability of outgoing documents was also considered an issue, with 51% noting that they found it difficult to record communications across every channel.

Now you know what is causing your inefficiencies and the real cost to your business i’m sure you’re wondering how to make your processes more efficient. Luckily enough we’ve highlighted 3 ways to do just that.

  1. Stop rekeying – rekeying is tedious, error-prone and costly (of both money and time). Instead, have your orders confirmed directly into your accounts system from your CRM to combat this.
  2. Store information in a central location – having both your business and customer information available in one single view that is easily accessible will avoid miscommunication.
  3. Get your customers placing their own orders – moving online will allow customers to place regular orders with you, without you having to really get involved in the process every single time.

So, unless you change the way your business runs (the processes it relies on) then you’re never going to increase your profit without spending more money. Making these decisions isn’t necessarily going to be quick, but once you recognise where you’re going and the need to improve you’ve already made the first step towards reviewing your processes.

Let’s look at the numbers. If you can improve the efficiency of your business we know you could add 50% to your profit, imagine this:

Scenario:

Before improved efficiency:

Costs: £80,000
Sales Profit: £100,000
Profit: £20,000

Increased efficiency (after):

Costs (remain same): £80,000
Sales Profit: £110,000
Profit: £30,000

= Increase of 50%

It’s not rocket science.

It’s easy to identify things that you can change straight away

If you want to make a real difference to your business, ensuring a significant, sustainable efficiency increase then you need to put measures and tools in place that manage the efficiency draining tasks, such as your order taking process. This is where an integrated CRM system such as ProspectSoft CRM and eCommerce can benefit your business. Through unparalleled integration with Access Dimensions, Exchequer, Pegasus Opera and Sage 50, our solutions save you time and the eliminate the unnecessary, error prone tasks such as rekeying orders between your systems. Speak to one of the ProspectSoft Team for more information.