It could be said that one of the reasons many businesses aren’t profitable is because making a business profitable isn’t very exciting. It often involves rather arcane things like spreadsheets, shaving a few cents a unit off manufacturing, making sure the temperature is set right, and so forth. It may also explain why so many businesses fail.
Profitability is not optional, especially in a small business. Here are some ways a 21st century business can maximize its profits in a difficult and challenging economy.
Any accountant will tell you taxes have the potential to be the biggest single expense a business has. If you get this one wrong, you can go from a record-setting year to deep in the red in a matter of a few days. The best way to minimize taxes is to familiarize yourself with the characteristics of your business entity and be relentless about your interpretation of your balance sheet. One excellent way to get started in a fast-development tax optimization strategy is to hire an accountant with experience in forensic accounting. This is a professional who can go back and look at your old returns to see where you might have missed opportunities to reduce your tax burden.
Semi-trucks crisscross America and the rest of the world every day. Some are full, others aren’t. If you are able, you should investigate the possibility of sharing your shipping with other companies, especially if neither you nor they can fill a complete trailer or container. Having the right model of truck to ship your goods can also make a difference. You might need a small or large truck depending on the needs of your business. Some companies, like Arrow Truck Sales, use many different makes and models for various shipping needs. The fixed costs are an entirely different matter. Getting a truck from here to there don’t change as much as you might think, even if it is carrying a full load VS a half load. Your ability to divide those fixed costs or avoid them altogether can make the difference between a shipment that costs you money vs. a shipment that costs you nothing.
If your accountant and you were to sit down and compare your energy costs to what they would be if you engaged in an all-out effort to reduce them, you might be surprised at the results. Back in the 1970s and 1980s there was an enormous push in the United States to insulate homes, turn down thermostats and reduce overall energy usage. Yet there wasn’t much information made available to businesses about similar programs for manufacturing plants, office buildings and retail stores. Reducing the electric bill for a 20,000-square-foot retail store by 20% would add up to an enormous sum over the course of a fiscal year.
The process of saving money might not be all that exciting, but shifting money from one column to the other on your balance sheet sure is. It’s something every business owner needs to consider.
Rachelle Wilber is a freelance writer living in the San Diego, California area. She graduated from San Diego State University with her Bachelor’s Degree in Journalism and Media Studies. She tries to find an interest in all topics and themes, which prompts her writing. When she isn’t on her porch writing in the sun, you can find her shopping, at the beach, or at the gym.