Increasing profits is a unique challenge for SMEs. There are limited hours and financial resources available to implement changes to the structure of your business in order to evolve and every new direction you take can feel like an uphill battle. Increasing profits is goal number one for any company, unfortunately there’s no exact science to business success. If costly advertising and rapid expansion aren’t in your budget there are ways you can improve your management and impact your profits, without taking a hefty sum out of your existing resources.
Evaluate What’s Not Working, And Change It
Wasted time may as well be spent putting money down the drain. For any small business owner time is valuable and time is limited so making sure every hour is utilised in the most productive way is vital.
Many small businesses, especially those in the early stages of development, make the mistake of putting too much on the plates of too few. In the early days it is usually necessary for one individual to be responsible for several roles but as a business grows these become more time consuming and complicated. On the surface it makes sense to take on these jobs yourself, you’re saving money by not paying another salary or outsourcing the work, but if undertaking the marketing means the accounting suffers, or handling the orders gives you less time to focus on staff management then your time is not being spent effectively.
Make a note of how long you spend on all of your daily tasks to identify areas that may be suffering. Look at the importance of each activity, rank them, and think critically about how much time should be spent on each one. If there’s not enough time in the day for you to meet all of the demands your money could be better spent delegating jobs so work is completed to the best possible standard.
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Take Note Of Wasted Time
When you rank your activities you might be surprised to see how much time is spent on endeavours that offer no benefit to your business. In many cases you might find that the least important jobs are the ones that take up significant amounts of time. Time spent chasing clients and customers for money and waiting for cheques to clear is one of the biggest road blocks standing in the way of SMEs increasing their profits. By implementing new payment systems you can cut out the time being wasted waiting for and chasing money so you can focus on what you do best.
Managing Your Payments
Cash flow is essential to businesses of any size. The ability to keep on top of and properly manage money has direct impact on a company’s ability to grow. Big businesses have been utilising direct debits for years in order to properly manage their cash flow and ensure on-time payments for a variety of reasons:
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- Security – Direct debits are one of the most secure methods of payment, they aren’t subject to human error in the same way as cheques and there’s no danger of them being stolen or lost in the post.
- Versatility – Standing orders are one of the most common methods of companies receiving payment but they have their drawbacks. The process of changing the amount paid every week, month or quarter is not easily changed and should a payment fail to make it into your account it can be weeks before you are made aware. With a direct debit account changing the amounts is simple, so if your customers/clients decide to upsize or downsize their orders the payment can be easily modified.
- Immediacy – Direct payments are automatic so you can cut all of the time you spend chasing up payments completely out of your daily work; once the money has been sent to you, you have immediate access. Cheques take at least 3 working days to clear so even when you physically have them you still have to wait.
By properly evaluating your time you can change payment systems and management techniques that don’t work for you and find solutions that do. Running a business is a trial and error endeavour; if something doesn’t work, change it, and find what does.
This post was written by Emma Smith on behalf of London & Zurich, specialists in direct debit services that are fast, cost effective and secure. If you’re looking for the best way to manage your businesses cash flow then a direct debit is the perfect solution.