Ten tips to improve the profits of your business

Sean Rustrick • 31 August 2023

Making a good profit is the lifeblood of any business, especially for small to medium-sized businesses (SMBs). It determines how sustainable and successful your business is and how much it can grow. Today's markets are very competitive, so in this blog post, we will explore ten effective strategies for you to quickly think about and implement to improve the profitability of your business . By understanding the purpose and need for each strategy, businesses can make informed decisions and drive positive change to increase their profits.


1. Reduce your costs:

Cost reduction is an essential method for SMBs to improve profitability. By identifying and eliminating unnecessary expenses, you can optimise your operations and increase your bottom line and end up with more money in the bank! For example, regular checks of your costs and outgoings can help identify areas where expenses can be reduced, such as excessive energy consumption or inefficient processes.


  • Example: A review of standing orders and direct debits can reveal payments for services that are no longer used or required.


2. Purchase efficiently:

Efficient purchasing goes hand in hand with cost reduction. By negotiating better prices with your suppliers, exploring bulk purchasing options, or seeking out alternative supplier contracts, a business can reduce their various costs.

 

  • Example: Regularly review your overheads and see whether your current supplier or another supplier can requote or offer discounts for the same service.


3. Increase your sales:

Increasing sales is a fundamental way to increase profits. You can achieve this by focusing on obtaining new customers and making sure existing customers are happy with your service and fees, improving them as necessary. For instance, you can use targeted marketing campaigns to reach your ideal customers or offer discounts to incentivise repeat purchases. Additionally, using social media platforms and online marketplaces can expand your customer reach and boost sales.


  • Example: Offering limited-time promotions or discounts can incentivise customers to make more frequent purchases, boosting sales and revenue for a restaurant.


4. Streamline your operations:

Streamlining operations involves improving workflows and processes to increase efficiency. By identifying bottlenecks, eliminating redundancies, and automating repetitive tasks, your business can save time and resources. This allows you to allocate your resources more effectively, which leads to  improved profitability.


  • Example: Integrating a cloud-based inventory management system can automate stock tracking, reducing inventory holding costs for a manufacturing company.

 

5. Target your marketing:

Targeted marketing is a powerful way to maximise the return on marketing budgets. By identifying your target customers and tailoring your marketing efforts accordingly, your business can reach more of the people who want what you’re offering and reduce wasteful spending.


  • Example: A local bakery could target its marketing efforts towards nearby residents through direct mail campaigns or localised social media advertising.


6. Upsell and Cross-sell:

You can increase average transaction values and boost your profits by encouraging customers to purchase a comparable higher end product than the one in question. In addition, some customers may be unaware of the other services you provide, so by offering complementary products or services during the sales process, you can encourage them to spend more. For example, a software company could offer premium features or add-ons to their basic package, providing additional value to customers while increasing revenue.


  • Example: An IT service company can offer additional features or upgrade options to existing customers, thereby increasing the average transaction value and profitability.


7. Enhance your customer service:

We all appreciate great customer service and this is crucial for your business to build loyalty and generate repeat business. By investing in employee training programmes and implementing customer feedback systems, you can improve your business’ service quality. This leads to higher customer satisfaction, your customers remain loyal to you and ultimately, your profits improve.


  • Example: Providing exceptional after-sales support and timely resolution of customer queries can increase customer satisfaction, loyalty, and repeat business for a service-based business.


8. Diversify your revenue streams:

It can be risky for a business to rely on a single source of revenue. Diversifying revenue streams can provide stability and reduce potential losses. Businesses can explore new product lines, expand into different markets, or offer additional services to existing customers.


  • Example: A fitness studio could introduce online classes or sell branded merchandise to diversify its income streams.


9. Optimise your pricing:

Pricing plays a crucial role in profitability. Analyse market trends, see what other people charge and conduct pricing experiments to find the best price point for your business’ products or services. Many businesses, especially small ones, quite often underprice the great product or service they supply.


  • Example: A software-as-a-service (SaaS) company could offer different pricing options to cater for different customer needs.

 

 10. Invest in training and development:

Investing in training and development programmes for employees can yield long-term benefits. If you enhance the skills and knowledge of the people who work for you, your business can improve its productivity, customer service, overall performance and staff satisfaction. This leads to increased efficiency, reduced errors, and improved profits.


  • Example: A retail store could provide sales training to its staff to improve upselling techniques and customer satisfaction.


So, to sum up …..

Improving profits is essential for the long-term success of any business. By considering these ten strategies, your business  can optimise its operations, increase sales, reduce costs, and enhance customer satisfaction and retention. It's important to remember that profitability requires a holistic approach, focusing on multiple business areas simultaneously. By continuously evaluating and adapting these strategies, SMBs can thrive in today's competitive landscape.

Companies House update

by Sean Rustrick • 31 January 2025
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Email Etiquette

by Sean Rustrick • 28 January 2025
Email Etiquette What you write in your emails and how you write them really makes a difference! According to industry findings, these are the top ten most disliked email habits; 1. CC’ing people in unnecessarily 2. Long-winded emails 3. Using slang terms 4. Spelling mistakes/ no proofreading 5. Marking emails as “urgent” when they are not 6. Swearing 7. Poor grammar 8. Using emoticons 9. Passive aggressive language 10. Gossiping Whilst the top ten friendliest email sign-offs are; 1. Have a great day! 2. Many thanks 3. Best wishes 4. Cheers 5. Thanks/Thanks again 6. Warm regards 7. All the best 8. Let’s catch up soon 9. Best Regards 10. See you soon Avoid using tara/tata, sent from iPhone, may the Force be with you, to infinity and beyond and take it easy when signing off emails! So, when writing emails remember to keep it professional and succinct, avoid jargon, slang and emoticons and always proofread for any spelling mistakes. You can never underestimate the power of a professional, well-worded email when contacting new and existing clients!

Autumn Budget 2024 - Update

by Sean Rustrick • 26 November 2024
The Chancellor delivered her Autumn budget on Wednesday which included the following key tax announcements: Taxation • Rates of income tax and national insurance paid by employees to remain unchanged • Income tax band thresholds to rise in line with inflation after 2028 • Basic rate capital gains tax to increase from 10% to 18% and higher rate to increase from 20% to 24% (second property capital gains tax rate to stay at 24%) • Inheritance tax thresholds freeze to be extended for a further two years to 2030 • Minimum wage for over 21s to rise from £11.44 to £12.21 per hour • Minimum wage for 18-20 year olds to rise from £8.60 to £10.00 Business • From April employer’s national insurance rate to increase from 13.8% to 15% and the secondary threshold when these contributions are due will reduce from £9,100 to £5,000 • The employment allowance for small businesses will increase from £5,000 to £10,500 • The main rate of corporation tax, paid by business on taxable profits over £250,000 to stay at 25% Indirect Tax and Duties • 5p cut in fuel duty to be extended by a year to April 2026 • Stamp duty surcharge, paid on second home purchases, to go up from 3% to 5% • Single bus fares cap to increase from £2 to £3 from January • Tax on tobacco to increase by 2% above inflation and 10% above inflation for hand-rolling tobacco • New tax of £2.20 per 10ml of vaping liquid to be introduced from October 2026 As always, if you require more information or want to talk about how this budget may affect you or your business, please just give us a call.

How to get YOUR tax refund

by Sean Rustrick • 18 November 2024
Each year, HMRC reviews the income and tax paid by employees and pensioners who don’t need to file a self-assessment tax return. If you’ve overpaid or underpaid, they’ll send you a P800 letter or a Simple Assessment.  Remember- refunds are no longer automatic! So you now need to take action to claim your refund. But don’t worry—if you don’t claim right away, the refund will remain on your tax record until you do. It won’t be lost! It is very easy to claim and receive your refund, just: • Log in to your personal tax account • Use the online bank transfer service • Access the HMRC app • Contact HMRC to request a cheque If you claim online, your refund will arrive within 5 working days. If you need help claiming, get in contact with the team on 01622 738165 and we can do that for you today! Make sure to stay on top of your tax affairs and claim what’s owed to you!

New IHT rules benefit British Expats

by Sean Rustrick • 29 October 2024
Inheritance tax (IHT) applies to your estate if you reside in the UK. You are considered to reside here even if you live abroad but have strong ties to the UK. However, from 6th April 2025, where you reside will be more closely linked to your country of tax residence. So, even if a UK expat considers their permanent home to be the UK, they might be seen as residing overseas. Therefore, part or all of the estate may fall outside of IHT! If you reside outside the UK, current rules state that for IHT purposes you may be considered as residing in the UK if you have been a tax resident in the UK for 15 or more years out of the last 20. Therefore, you will have to move abroad for long enough to be considered as a non-UK resident for tax purposes! But from April 2025 where you reside will not define if your estate is subject to IHT. Instead, if you have been a resident in the UK for 10+ years, your estate (including worldwide assets) will be within the scope of IHT. If you are a resident abroad and your estate is ruled by both UK and the other country’s IHT, a double tax treaty may reduce/eliminate the UK IHT on foreign assets. So the key to escaping the IHT net will be establishing ten years as a non-UK resident!  If you haven’t been a resident for UK tax purposes for at least 10 years on the 6th April 2025, you can return to the UK for a further ten years without your estate coming into the IHT net, but your UK assets will remain liable so to reduce IHT, consider moving your assets out of the UK! Like always, the Rustrick Accountants team are here to help for any and all tax queries. Give them a call today on 01622 738165 and they will be able to advise on the best plan of action for you!

New Student Loan Thresholds!

by Sean Rustrick • 29 October 2024
The earnings thresholds for student loan repayment increases in April 2025 for Plan 1 and Plan 2 for undergraduate loans in England, Wales and Northern Ireland. Like usual, this will be automatically added to your employee’s pay when the payroll software is updated in 2025. The change for Plan 1; £26,065 (£2172.08 per month, £501.25 per week) The change for Plan 2; £28,470 (£2,372.50 per month, £547.50 per week) There will be no change to the repayment rate (which is currently at 9% of earnings in excess of your plan threshold). If you have savings and investment income that exceeds £2,000 in a tax year, you must take this into consideration when calculating your loan repayments. You must also inform HMRC on your self-assessment tax return.  If you think that you will be affected by this change, get in touch with the team at Rustrick Accountants on 01622 738165 and we will help you out today!

Navigating VAT Across Borders?

by Sean Rustrick • 16 October 2024
Are you a UK-based business providing services to EU clients? Confused about VAT registration and compliance? 🤔 Don’t worry! Discover how the reverse charge mechanism works and what it means for your VAT obligations in our latest blog. From invoice requirements to VAT thresholds, we’ve got you covered. Simplify VAT Compliance for Your EU Clients with These Key Insights At Rustrick Accountants Limited, we’re dedicated to being your trusted experts for all things accounting and tax related. Our mission is to make VAT and tax compliance straightforward, so you can focus on what matters most growing your business. VAT Registration and Compliance: Essential Tips for UK Businesses If you’re a UK-based business providing services to clients across the EU, understanding your VAT obligations is crucial. Here’s what you need to know when dealing with EU clients: B2B Services (Business-to-Business) When providing services to an EU company (B2B), the reverse charge mechanism generally applies. Here’s how it works: No VAT Charge: You do not need to charge VAT on your services. Instead, the EU company (your client) is responsible for accounting for the VAT in their country. No Need for EU VAT Registration: Typically, you don’t need to register for VAT in the EU. However, you must include a statement on your invoice indicating that the reverse charge mechanism applies. Ensure your invoice includes your UK VAT number (if applicable) and the VAT number of your EU client. Conclusion: Whether you’re a UK-based self-employed professional or a limited company supplying services to an EU company, you don’t need to worry about VAT registration in the EU. The EU company will handle the VAT via the reverse charge mechanism. Just make sure your invoices are correctly formatted and that you comply with any UK VAT requirements. Outside the Scope Sales It’s also important to note that sales to your EU clients are "outside the scope" of UK VAT, so they don’t count towards the £85,000 threshold for VAT registration. However, any other UK-based sales within the scope of VAT will contribute to this threshold.  Why Partner with Rustrick Accountants Limited? Navigating VAT regulations can be complex, especially with cross-border transactions. That’s where we come in. At Rustrick Accountants Limited, we provide expert advice and hands-on support to ensure your business remains compliant without the stress.

Are you considering MVL (Member Voluntary Liquidations)?

by Sean Rustrick • 16 October 2024
There will be a new Budget on the 30th October 2024 and there is an anticipation of Capital Gains Tax rates increasing. This will mean that there will be an increase in voluntary liquidation. We are hoping that any changes made by the Budget will not take effect until the new tax year, but it is much better to be prepared now! Why would you consider MVL? Usually, it is used where a successful business owner intends to close a company to gain the benefit of a capital distribution from a liquidator and, often, Business Asset Disposal Relief too. If you feel like MVL would be beneficial for your business, then consider these points: - Your accountants will need time to prepare the final full set of accountants and then the directors will need to settle all creditors before liquidation. - When the company is in liquidation, you must advertise a notice to creditors for a minimum of 21 days before making a distribution to shareholders - MVL will be implemented quickly only if the company has no creditors and only cash! As you can see, it does take some time, so start thinking about it today and get in contact with us now to talk through the procedure and first steps. If you want your shareholder distribution to be made before the new Budget, the formal liquidation needs to be started by Friday 27th September. Of course, the Budget has not been announced yet and it is inevitable there will be delays so nothing is set in stone, but it is essential that we get the ball rolling to make the procedure as stress-free as possible!  Give us a call on 01622 738165 and talk to one of the team at Rustrick Accountants who will be more than happy to talk you through the steps and whether MVL would be beneficial for you!

Personalised Number Plates: VAT

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Have you bought a personalised number plate?

Leaky loos losing you money?

by Sean Rustrick • 16 October 2024
95% of businesses are throwing money down the drain when it comes to utility bills- and water bills make up the majority of this! Did you know that an average person uses 1,000 litres per week? So, when you think about a whole business and how much water it would use, you can see how the money adds up! Thames Water suggests that up to 25% of water supplied to business customers could be leaks. When Thames Water visited businesses, it found that the average leaky loo in business properties loses over 2,000 litres per day and uncontrolled urinals lose approximately 1,800 litres per day! The cause of the leak is usually the mechanical flush valve- seal degradation, faulty fill valves and faulty dual flush valves. A leak needs to develop to 300 litres per day before it is visible, audible or leads to higher bills. This means that 215 to 400 litres of clean drinking water is wasted per toilet every day. What should you do today? Put a sheet of toilet paper on the back of the bowl (above the water) and if it gets wet then you might have a leak! If you can find the cause of the leak, fix it straightaway as it will be costing you money right now! Many water companies will come and fix leaky loos for free!!  Toilets are not the only area to look at when it comes to saving water. Start by asking yourself: do you know how much water you are currently using? Do you know how much this is costing you? If you can work out what your expenditure is, we can help you figure out how to cut that number down! Just give us a call on 01622 738165 and talk to the team today to find out more!
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