Averden Advisory · Editorial perspective
Profitability improvement is rarely one big decision. It is usually five smaller ones, made with evidence.
First, know your margins by product, customer and site, not just in total; the average often hides loss-makers. Second, review pricing: many businesses have not re-priced against cost inflation. Third, challenge the cost base by activity, protecting what drives revenue. Fourth, improve the mix: shift effort towards the customers and products that earn their keep. Fifth, tighten working capital, because profit trapped in debtors and stock does not pay wages.
For example, a one-point improvement in gross margin on £2m of revenue is £20,000 of additional profit, often more achievable than £20,000 of new sales.
Track each improvement against a plan so the gains are real and sustained. This article is general information, not personalised advice.
This article is general information and is not legal, financial or insolvency advice. Please seek advice on your specific circumstances.
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