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Small Business Strategies To Increase Profit

As a small to mid size business, any increases or decreases in your overall profit can make or break the business. So finding even small ways to increase your bottom line is worth the read.

Where do you look to find these dollar increases? You start with expenses!

At this point in time, your business is generating as much income as it can, under the current thinking. Therefore, trying to increase revenue can be more difficult than simply looking at your expense structure to see how you can reduce the money flowing out.

The key to making a profit in business is increasing revenue while managing or eliminating expenses that are overspending or not needed at this point in the business.

As a CFO, I have seen tremendous improvement in a business's profit after simply analyzing the detail of a company's Income Statement.

Cost Of Goods Sold (COGS)

COGS is an expense that is directly related to the income of your business. It is the materials, labor, and other costs that go directly into the product creation.

With Cost Of Goods Sold being directly related to revenue generation, you don't want to just start slashing those costs.

The best approach to increase your profit margin after COGS, is to have multiple vendors on the materials you purchase.

Having multiple vendors allows you to, not only get the best price for your raw materials, but also negotiate terms that help with cash flow. For example, one vendor may offer a 10% discount if paid within the first 30 days while another vendor may offer 12%, on the same period. As long as the delivery and quality of the raw materials are the same, the higher discount should be chosen.


Employees are an essential part of a growing business. Unless you are the end all, be all of your business, nothing can affect the profit of your business more than your payroll expense.

Once again, you can't just start firing employees. Rather, you have to logically look at the work that needs to be done with the employees that you currently have. What I have noticed over my career is that many companies are overstaffed, or have the wrong people in the positions which wasted a lot of the businesses' profits.

So, one of the key indicators of a successful organization is making sure you have "the right people, in the right seats, on the right bus".

Do you have the right manager managing the store? Is your Accountant talented and able to help you or just a yearly charge? Are there too many employees sitting around which could indicate that a there are lazy employees, not enough work, or that the work has not even been identified?

Point being, as a business owner, you should be periodically evaluating your business's work flow to see if all work is being completed and if the employees that are doing that work, are positioned properly. Making adjustments now, rather than later, will only increase profit and efficiency sooner.

General & Administrative (G&A)/Other Business Expenses

This bucket is comprised of the rest of your expense layout and ranges from office expenses, to insurance, to rent.

There can be some big savings that exist in these types of costs, but you have to look for them.

Have you compared insurance rates lately? Are there monthly subscriptions that are being charged, that aren't being used? How about Merchant Costs? Have you researched any competitors that could bring that % of revenue cost down?

As a small business, or any other sized business, using a combination of these strategies to increase your profit can help build the business further, even if it's a dollar at a time.

Blue Collar CFO

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