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IN THE TRENCHES: Eight ways to boost your company's profits

by Ron Pelger | May 26, 2009
If you're not in business to make a profit, then why are you in it at all?

Every company wants to make money. This past year has seen the recession eating away at profits and companies struggling to make ends meet. When profits fail to increase, they drag down growth, which isn't very healthy for the future of any establishment.

Does your profit-and-loss statement have management sweating it out every quarter to keep the company above water? Too often, company executives get enmeshed in the same routines that suppress the organizational profits and productivity. The first and most popular priority is to make reckless cuts in order to try to save the company instead of implementing positive creative thinking. The results can be even more damaging.

Perhaps your organization feels it has repeatedly analyzed every single operating line possible and has now reached an exhausting end with nowhere else to make an adjustment. But just in case some quaint area was missed or examined differently, here are eight points to consider in helping boost your profit.

Don't under price. One of the worst ways to run a business and try to make a profit is to have your customers become addicted to low prices. Once you set an image of being a low-priced operator, you can never get out of it. Sure, you may pick up some small sales increase, but the question now becomes, are you making money from those added sales or losing your shirt in doing it? Don't get your company into a price war it could never win. Review every price and don't be afraid to make necessary increases. Whether it's a dollar a box or 10 cents a pound, it all has a huge impact on the bottom line.

Prevent out-of-stocks. Here is an area where most companies become very lax. If you're a shipper, fill all orders to the rim. If you're a retailer, load the shelves for shoppers. I was making my rounds to check out different supermarkets recently and heard a shopper ask for red onions in the produce department. The clerk informed her they didn't receive any on the delivery. Upon going to my next supermarket, I saw the same shopper in that store buying red onions. Out-of-stocks always send customers elsewhere and they just may like what they see on the a competitor's turf.

Make marketing work. You could spend wildly on all types of crazy advertising, but the best marketing tool is your customers. Word-of-mouth marketing is the most effective way to reach new business. The best part is it doesn't cost you a red cent. All you have to do is cater to your customers. If you set a poor example, it will work in reverse.

Become more frugal. You no doubt made some cuts in expenses. Well, turn around and get even cheaper. Include other items that can add up just as fast. To start with, you may want to put a lock on the supply room cabinet. Pens, paper, notebooks, folders and the like all add up. Also, consider negotiating for better telephone service packages, building and equipment leases, insurance and supply materials. With a weaker economy, now is the time to do some renegotiating. The slightest change can save a load of money. The cheapest operators are usually the richest. Renegotiate now.

Appraise your product assortment. Do you really need to offer every single item, pack and size there is in the world? Put your product mix on trial. If you remove slow-moving items, it gives you an advantage to concentrate on those with a favorable turnover, which will bring in profits more rapidly. Items that nobody wants become a drag on the bottom line.

Stop complacency waste. Just like the automobile giants, your company can become complacent and erode quickly. Whenever sales and profits begin to be favorable, that's the time to watch out for misuse of equipment and other expenses. Ripping open packs of printing paper and jamming the copy machines is a sign of abuse. The next phase will be overspending. Check the wastebasket alongside the printer. See the waste.

Do more upselling. Most fast-food restaurants know how to use this method the best. They not only take your order, they use the power of suggestion to sell you more. Learn from the best by doing the same. Use the "Oh, by the way method" in selling to your customers, as in, "Oh, by the way, how about us loading a couple pallets of new crop grapes along with your order?" Upselling can add thousands of dollars to company profits.

Hammer away at shrink. Millions of dollars are slipping through company cracks in unnecessary shrink from the growing fields to the supermarket checkouts. Breaking the cold chain, poor pallet loads, weak packaging, over trimming, improper handling, incorrect retails, supply stockpiles - and the beat goes on. If your company doesn't take shrink seriously, it can become the single most destructive enemy of profit.

These are just a handful of topics you should review over and over again. Manage smarter in order to continue in your business. Get your price, stock sufficient product, pamper customers, eliminate slow movers, penny-pinch, stop waste, sell more and cut the shrink.

Who knows? If you improve just one single little detail, it could take your company from a level of defeat to a level of profitable growth.

(Ron Pelger is the owner of RONPROCON, a consulting firm for the produce industry. He can be reached by phone at 775/853-7056, by e-mail at, or check his web site at www.power-