There are basically four main areas that drive the profitability of a business. These are:
- Cost reduction
- Increase in turnover
- Increase in productivity
- Increase in efficiency
A business can also plan to venture into newer, lucrative markets or come up with new and innovative products or services.
Cost Management to Drive Business Profitability
Your profitability is affected by how you manage your costs. Almost all businesses can identify areas where they can reduce costs in their operations but it’s vital to avoid cutting costs by compromising on the product or service quality. All businesses must assess their main cost areas. These include suppliers, finance, production, premises etc.