Decreasing Sales – Increasing Bottom Line – Increasing Your Business Value – How?
Many business owners fall into the trap of wanting to increase sales at all costs.
Here is a simple method, that even if sales are falling, the bottom line can go up.
Today we’ll only concentrate on one aspect.
Assume our example company is a manufacturing company.
In example 1, the company has a turnover of $100 k, cost of goods of $60 k, gross profit of $40 k, expenses of $20 k resulting in an EBIT of $20 k.
In example 2, let’s say we reduce turnover by 2% and with astute negotiating with our raw material suppliers, are able to reduce the cost of goods by 8.3%.
Assume we can keep direct expenses flat.
A 7.5% increase in gross profit leading to a 15% increase on the bottom line.
But, you may say, that is theory. What about the practical side of it?
We’ve done it with several companies and increased profit. In one instance, the cost of goods was reduced by 11% !!
When those businesses come to sell, guess what?
They achieve a higher price, just because of a simple strategy.
Look out for our next practical tip in the days to come.
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