It would seem that nothing could be simpler: identify unnecessary expense items and cancel them. However, you need to act carefully and thoughtfully. For example, a company reduced the most significant expenses in the cost of a product and began to receive more profit. The task seemed to be completed. But after some time, sales fell, as did profitability indicators. What are the reasons for these unpleasant changes? The fact is that the purchase of cheaper raw materials affected the quality of manufactured goods. At first, the consumer did not recognize this and continued to actively buy (which immediately led to an increase in resource efficiency), but gradually sales began to decline, and with them, profitability.
To increase business income, it is recommended to approach the issue of reducing expenses based on the principle of justification. First, determine how the removal of a particular cost item will affect the company's work, and only then begin to implement these reductions.
Thus, the cost optimization the benefit of using our student database system should be based on:
a correct approach to planning, distribution and control of expenses;
standardization of expenses according to the degree of priority, taking into account how justified they are (whether they will increase profits and by how much);
plan-actual analysis indicating absolute and relative deviations (identify why the overstatement occurred and take measures to reduce these deviations).
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Increase business revenue by increasing profitability
Profitability is understood as the level of efficiency of using the resources available at the enterprise. These are money, personnel, material and natural resources (if they are used as raw materials). A very important indicator for any company is the profitability ratio. To calculate it, you need to divide the amount of profit by the value of the enterprise's assets (its property and money) at a given point in time. Studying the profitability ratio is the work of the accounting department; Internet marketers do not touch on this issue. This can be done by a business owner (sole proprietor, for example), if he has enough knowledge and experience.
There are several types of profitability:
sales;
enterprises;
capital.
What is the sales return indicator? It is usually expressed as a percentage and shows what part of the unit of money earned is profit. As an example, the SEO promotion service. It costs about 15,000 rubles per month. You can calculate the profitability of this amount as a whole, or each ruble. The issue of how to increase business profitability by increasing sales efficiency is dealt with by the management. Because it is they who have a comprehensive amount of information about the state of affairs in the company.
Knowing the level of profitability of an enterprise, one can draw conclusions about whether the resources at its disposal are sufficiently effective: premises, equipment, and everything else.
Return on capital is calculated as follows: take net profit (this is the