COVID-19 has triggered a series of business bankruptcies and closures, but there are also businesses that are thriving despite the downturn. Whether or not your business has become less profitable in the wake of the virus, it’s always worth reviewing ways to increase profitability. The following are four tips for increasing profitability in a post-COVID-19 world:
Some companies find that the majority of their income comes from a tiny minority of their customers. When resources are limited, it pays to focus relentlessly on meeting the needs of these highly lucrative clients, even if it means sacrificing the levels of service provided for those that are less profitable.
Decreasing overhead expenses can sometimes lead to significantly greater profitability. The key is to reduce overhead in ways that don’t sacrifice productivity.
If it’s appropriate to do so, conduct an energy audit to determine whether you could reduce ongoing energy expenses. It might be possible to cut expenses by replacing outdated machinery with energy-efficient models. Or you might be able to cut costs by implementing a second shift to take advantage of cost advantages empowered by time-of use tariffs.
In some cases, it may be cost effective to hire a full-time or temporary energy manager. Some organisations with high energy expenditures find that an energy manager is able to save them much more than they’d spend on the energy manager’s salary – which is a winning proposition for all parties involved.
Your team could also discuss the possibility of moving to less expensive facilities and having some or all of the team members telecommute and / or teleconference on a part-time or full-time basis instead of regularly commuting to work.
Data can help you solve some of the issues that quickly drain a company’s profits. Its most current widespread use is fraud detection and elimination; if your business suffers from frequent fraudulent transactions, leveraging data appropriately is quite likely to reduce or eliminate the fraud problem. Data can also be used to increase efficiency and improve customer loyalty.
If you don’t already have a suitable data analyst on your team who can implement these ideas, you might want to consider either hiring one or “creating” one.
Many businesses find that it’s more cost effective to train an existing team member
The ideal candidate is the team’s most brilliant problem solver. The right candidate will already have an aptitude for maths and a talent for computer programming. S/he’ll most likely need some additional instruction – possibly in the form of certifications, a course or a master’s degree in business analytics.
The company, ideally, should consider incentivising the team member for undertaking this additional training. The incentives could be partially or fully paid tuition, plus a possible pay raise.
If you recruit a new team member with the needed skills, expect to pay a premium to do so. Talent in this field is in short supply and high demand.
People are the lifeblood of your team’s productivity. If you’re like many other employers, you’ve already made a sizable investment in training your employees. If you have to replace them later, it’ll most likely cost your company a bundle to do so. It doesn’t usually make sense to cull people, but there are exceptions.
The first exception is if you made bad hires to start with. If you have team members who are divisive, unproductive or unwilling to learn or take direction, you may be better off letting them go.
And the other exception is if business is really so horribly bad that you can’t meet payroll. But if that’s the case, do be sure you’ve exhausted the resources available to you before you take the drastic step of making anyone redundant. Seek out information about the JobKeeper legislation that was recently enacted and COVID-19 resources for family businesses for more information on what the government is doing to help businesses retain their employees during these challenging times.
These are four ways businesses could potentially increase profitability in the era of Coronavirus. Hopefully you’ll be able to implement some of these ideas to ensure your business remains profitable post-COVID-19.