3 ways to increase business profit in 2023 with Linda McGowan Accountants
Where to start on sales, pricing and costs
Boosting profit is possible in uncertain economic conditions. Move the profit needle with expert accounting support.
Support for your entire business cycle
Inflation and interest rates are rising, property prices are in flux, and a global recession may be looming. As a result, 2023 is set to be another year of economic uncertainty for business owners.
Your not-so-secret business weapon during times like these? A trusted accountant who supports your entire business cycle – and communicates beyond a once-a-year check-in. With the right advice tailored to your business, you can increase profit rather than simply survive.
A snapshot of current Australian economic conditions
1. Increase sales
Making more sales is an obvious place to start boosting profits for businesses with room to expand – although sales alone do not equate to profit without a mindful and sustainable growth plan.
Partnering with an accountant can help the business grow at a manageable pace, with support to:
- forecast sales, cashflow and profit
- scale your supply chain
- invest in the right infrastructure or inventory.
In the face of declining household and business spending, your strategies may include targeting the spending of existing customers to increase their lifetime customer value (LCV). Boosting LCV may include optimising your customer service to encourage referrals and retention, acting on feedback for continuous improvement, and customer loyalty programs.
Get started on increasing sales
2. Increase prices
Increasing prices to boost profitability can be an attractive option for businesses with inflated supplier and running costs eating into the bottom line. It must be done thoughtfully to avoid losing existing customers, offside or scaring away new prospects.
It might be a good time to implement a price increase if your business:
- struggles to keep up with demand
- has had a sudden influx of new customers
- has increasing supply and operating costs
- bases its marketing strategy on an upscale image
- last raised prices a while ago.
It might be wise to hold your horses on any price changes if your business:
- struggles with customer retention
- has had quality, customer service, or negative PR issues
- targets an audience with limited discretionary spending.
Get started on increasing prices
3. Reduce costs
Reducing business costs is the third key option for eking out more profit in a stretched economy – and it’s quite the challenge thanks to rising living, operations and supply chain costs.
Reducing costs despite inflation demands a thorough understanding of your business spending, including:
- discretionary versus non-negotiable operating costs – what is up for review
- supplier costs – who are you dependent on in the supply chain
- where profit is made in your business cycle – small changes to pricing formulas can have a big impact on profit.
Seeking quotes from new suppliers is where many businesses start cost-cutting. It's essential to know your business's acceptable level of risk for suppliers – are they meeting the same quality and ESG commitments as the original supplier? If it seems too good to be true, it probably is. An alternative to maintaining your profitability may be to adjust your product or service to keep pricing the same but with reduced size or scope.
Depending on your business model and industry, strategies may relate directly to staff, including:
- incentivising employees to meet operational savings KPIs
- reviewing staff coverage and payroll costs over quieter periods
- upping productivity by replacing inefficient systems with smarter tools.
Get started on reducing costs
Do more than survive in business in 2023.
Expanding your sales, increasing prices and reducing costs are valid strategies – but there's no one size fits all.
The right support for your business can be the difference between sinking or swimming. Ask questions, leverage your accountant's expertise and rely on them to complete the complex analysis required to make informed strategic decisions.