Precast Inc. - November/December 2008 - (Page 34) 3. Don’t forget the 80/20 rule: 20 percent of your clients account for 80 percent of your profits. Reduce your sales by a selective 10 or 15 percent and test what happens to your company’s profitability. 4. Raise prices selectively or overall to increase profitability, or to at least maintain the currently profitability level. Important note: even if customers accept these increases as part of a general price adjustment, any such moves should be done using a carefully thought-out strategy that doesn’t isolate clients. 5. Consider improvements to your product mix and the relationship between how many individual products or product groups that you’re selling. 6. Look at each product you sell in terms of the costs associated with it and the net margin that each makes. It could be that the products generating the most gross profit and contributing the most to your sales volume are the ones that cost the least to sell. 9. Finally, look at the potential for major changes to your business, such as expanding into market sectors and developing new products or services. When done right, this type of “organic growth” can result in higher profits without much added infrastructure costs. 10.Unless you’re using it to increase the sales of profitgenerating lines, selling more of loss-making product lines doesn’t necessarily translate into higher profits. For best results, put your focus on selling those lines that actually generate profits for the company. “Every company is different, and each has different strategies and competitive climates to deal with. The key is to realize that industry norms are not set in stone in terms of how they relate to your company.” – TOM NOON, INDUSTRY INSIGHTS INC. As you examine your own operations to find ways to improve profitability, remember that no single solution works for all companies. Using the NPCA Benchmarking Report in conjunction with the strategies offered by Noon and listed above, you can effectively assess your firm’s business profitability and figure out new ways to deliver growth to your bottom line. Bridget McCrea is a freelance writer who covers manufacturing, industry and technology. She is the winner of the 2007 Florida Magazine Association's Gold Award for best trade/technical feature statewide. 7. Wherever possible, reduce inventory levels as a way to decrease the amount of potential profits that you have tied up in finished products out in the yard. 8. Work your accounts receivables by employing a tighter control of credit. This is a particularly useful strategy in today’s economic climate, where much of a company’s potential profits are tied up in slow-paying clients. BOOTH 1344 THE PRECAST SHOW 34 NOVEMBER/DECEMBER 2008 | PRECAST INC. http://www.eagleeyeproducts.com http://www.eagleeyeproducts.com
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.