As small businesses reset for the last quarter of 2024, it is the perfect time to make real change. Organizations assessing their net profit position regularly is critical. As part of a Business Health Check, adjusting a few key areas can make a massive difference in the profit position of any company. Working with a certified, professional ActionCOACH business coach, your business can start the year off right.
As part of a comprehensive review of your business practices, processes, and systems, an ActionCOACH can guide you through a transformation and reinvention of your business. ActionCOACHes are not consultants and wouldn’t leave you with a laundry list of ‘To Dos’ and then disappear. An ActionCOACH partners with you to make real change and get you real results.
The first step of any good health check must be securing your net profitability. The first step is to increase collection of your receivables:
Create an Accounts Receivables aging report
Know your ART Ratio; Net Annual Credit Sales ÷ ((Beginning Accounts Receivable + Ending Accounts Receivable) / 2)
Be proactive; Don’t wait until they are late
Move swiftly on past due accounts; Send reminders and notices on time
Consider offering a discount for early payments
Consider offering a payment plan; break up obligations into manageable amounts
Work with your banker to get cash management options
Make it easy for your vendors and suppliers to pay; Offer multiple ways to pay
After you have maximized the cash coming into your business, reducing cost of goods sold will help improve profitability as well. Some areas to reduce COGS for your business include the following.
Consider buying in bulk
Start bargain hunting
Substitute lower cost materials if possible
Leverage suppliers
Negotiate vigorously
Reduce waste and rework
Automate whenever possible
Move manufacturing if necessary
Finally reducing direct costs will also lead to higher profitability. Here are some ways you and your coach can pursue.
Reduce labor expenses
Upgrade or retire equipment
Make materials changes in production
Scrutinize your inventory management processes
Streamline all logistics
Improve supply chain relationships
Once your organization is in a more secure net profit position you and your coach move to the next step of the business health check, business growth.
Moving towards improved profitability will give you confidence that the changes you are making will allow you to transform your organization into an enterprise that works for you. Remember it’s a new year filled with new possibilities. Reach for them all.
Visit our website to learn more: Business Coaching - ActionCOACH - Real People, Real Resuts
Edited from the original article by ActionCOACH Carmen Gigar
September 17, 2024
