You may decide to set goals with your client around increasing profit margins. Some of the ways you may consider going about increasing profit margins include:
Profitability analysis around:
- Clients
- Locations
- Product lines
Profitability analysis in the above categories may consist of you taking into consideration that just because you are receiving large dollar amounts from clients, if you consider the resources, supply, and materials costs allocated to that job, are you necessarily making a profit on those clients? Similarly, are there products that have a high sticker price but also require a lot of labor and expenses to complete? If so, is it profitable for the client to continue selling these products?
Another way you may help your clients increase profit margins is through budgeting and forecasting. This can help your clients understand how many expenses and resources need to be allocated to each job or project, and thus allow them insight into the profitability of various aspects of their revenue streams.
So many companies do not understand how to implement the software and coding environment necessary to track and analyze various profitability centers in their business. They do not know how to pull together the various reports they need on a monthly or weekly basis to analyze this information -and even more concerning is that they do not have the courage and wherewithal to have the difficult conversations with their divisional managers, customers and clients. They may need to change the processes that are no longer working or restructure and estimates process that leads to losing money. As you can see, there are a multitude of ways for you to offer value to your clients when it comes to increasing profit margins.
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