COULD you give me a few words of wisdom on improving the profitability of a manufacturing business?
SALES are vanity, profit is sanity. It is good to see that you are focused on the bottom line. In most manufacturing businesses wages tends to be the biggest cost.
It is not so much about slashing your payroll cost, but about being more efficient and able to produce more product with the same labour levels.
Enterprise Ireland has great supports for lean manufacturing, and if you have not embraced these already I would suggest you investigate the topic and if possible get a lean expert into your business.
Many manufacturers that I have met have missed the opportunity when encountering good business growth to renegotiate prices with their suppliers.
I am sure your business is two or three times bigger since you started. Have you renegotiated prices of items you are buying in?
Very few of your suppliers are going to volunteer discounts and therefore tendering your key costs would be a vital part of improving profitability.
Surprisingly, growing your sales can very often be a solution to increasing profitability. Some businesses make the error of slashing all costs, which in turn makes it difficult for the business to grow. It is about creating a balance.
If you can maintain the business costs at current levels, and drive more sales through at the same time, that will automatically result in the business being more profitable.
Do keep that in the mix of actions you take, otherwise you run the risk of stifling business growth.
Problem SolverSEND YOUR SMALL BUSINESS QUESTIONS TO HIM[email protected] FEARGALQUINN.IE