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Expert tips for increasing profits in 2024

Knowing how to increase your business profits should be top of your to-do list for 2024. You'll find plenty of ideas in this article to increase profits for your small business.

What is profit?

Profit is money left over after subtracting all your business expenses from your total revenue. As a trade business, you’ve probably always got your eye on making a profit.

After all, it’s the measure of success for most businesses. The key is knowing how to increase your profits.

  • Checktrade offers its members many different ways to grow their business
  • You can use profits to invest in your business
  • That way, you can build a more successful long-term business

If you run your business as a limited company, knowing how to increase company profits means you could pay more in dividends to your shareholders. This can encourage further investment in your company.

What is the break-even point?

Your break-even point is when revenue and expenses are the same. It helps you if you know how to read a financial statement.

When you break even, there is neither profit nor loss. Understanding your break-even point can help you to know when to increase prices or reduce costs to achieve future profit.

Strategies to increase your profits

Understanding your profit margins is the first step towards increasing profitability.

When you have an in-depth knowledge of your expenses and revenue, you can create a budgeting strategy to help boost profits.

There are many strategies that companies use to boost profits. What works for you will depend on various factors. Most profit-increasing strategies, however, begin with a clear goal and a detailed plan for achieving it.

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Here are some ways of increasing your profits:

Streamline your processes

Reviewing your processes is a great way to make savings. One way to do this is by comparing your business with similar companies. You can do this through mutual sharing of information or by using market reports and trade associations.

You may want to look at your energy costs and see what alternatives are available. A new approach to your supply chain can reduce buying costs.

Always supply your own materials

Customers often believe that buying their own materials will help them to reduce costs. This may be true for the initial financial outlay. In the long run, though, inferior parts could cause more problems and require costly repairs.

Explain to your customers that the materials they supply might not be covered under any warranties. Tell them that when you supply the materials, they are both of a higher trade quality and they will be covered under your warranty.

O'Briens Electrical Team

Invest in your team

Building a trustworthy and competent team is an essential part of business success. Investing in your workforce can have a hugely positive impact on your profits. A great team will also be appreciated by your customers who will realise they have chosen the best people for the job.

Building a team involves engaging with your employees. Ask them about their goals. Offer them the training they need to build their career. And provide them with a job they enjoy so that they become an integral part of the business and are invested in its future success.

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Reduce unnecessary costs

Cutting costs seems like the obvious way to save money and boost profits. Some costs, however, are essential and are needed to stimulate business growth. Highlighting unnecessary costs can be tricky but a good place to start is with waste.

Review your company’s use of materials. How much material is wasted and could it be recycled and reused? You could also review your scheduling. Ensuring your timescales are realistic and achievable will ensure that your costs are reduced, and you can plan more efficiently to save money.

Embrace new technology

Many new technologies are designed to make our lives easier. This is true for our personal lives and in the business world. Automation is becoming increasingly common in all areas of life. When running a business automated software can help to significantly reduce costs and improve efficiency.

There are many apps available today that help with everything from payroll to job scheduling. One of the most beneficial for tradespeople is the Checkatrade app. Directly connected to your Checkatrade profile, it can help you to streamline your business, gain more leads, and boost profit.

How to price a job to be more profitable

It’s always important to get paid what you deserve. To do that you need to price jobs carefully and accurately.

Remember that pricing a job should include all the costs associated with the work. This can include labour and your overheads. You also need to add in your profit margin.

Don’t forget to leave some wriggle room on the quote you give customers. This could come in handy if unexpected extra costs arise.

Our handy free Pricing Template guide could come in handy.

Builders quote

Ways you can reduce costs to increase profits

Reducing costs to increase profits is all part of running your own business. In today’s highly competitive market, it’s more important than ever to increase your profit margin. Here’s a quick checklist of things to consider when trying to increase profits.

  • Suppliers – Review your costs. Can you negotiate a better deal, or do you need to change suppliers?
  • FinanceConduct an in-depth review of all expenses vs revenue. Are there any areas where you can save money? Good financial planning boosts profitability
  • Assets – This includes all your equipment, vans, and premises. Are there better alternatives or more cost-effective ways such as hire vs purchase?
  • Materials – Do you buy in bulk? Is your waste management as efficient as possible? Are there any alternative materials you could be using to save money? Are you marking up the cost of your materials?

Increase your profits and build your business

Not joined? Checkatrade has work to send your way

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Checkatrade member case studies

We asked some of our members for their insight into saving money and increasing profits. Here’s what they said:

Think carefully about using subcontractors and shop around for the best deals on materials

I had a sub-contractor helping me out quite often a while ago just to fit more customers in the time I had. Sub-contractors are quite expensive so I decided to use the subby less and say to my new customers it will be a little wait before I could do the work. Nearly all customers were happy with this, and I just did the work myself and kept all the profits! I also use five different wholesalers for certain items, which is a pain, but the savings I make knowing one wholesaler is cheaper for a certain item is definitely worth the hassle! My van is like a mini wholesaler itself, I like to keep a stock of quite a few items so I don’t have to go to the wholesaler as much so I can fit a smaller job in on the way home rather than spending the time during the day to go and get bits for jobs!

Alex, Simm Electrical Services

Buy in bulk and arrange customer quotations by area to save on travel

We have been buying materials and air conditioning units as and when we needed them, but we realised that this was costing us more money. We decided to bulk buy our materials saving us money in the long term which meant we were also able to pass on our savings to customers. We use local companies to help support small businesses in our area. We also try to book quotations per area on certain days to reduce the amount of driving that needs to be done, reducing our carbon footprint as well as ensuring our engineers’ times are used most efficiently.

Daniel, Kaia Engineering

Do your research and don’t undersell yourself

I’ve built up strong relationships with a merchant, by committing my materials to his branch, he matches (and usually beats) the price of anywhere that’s cheaper, along with free next-day delivery to wherever I want. Being a new business, I’ve researched a lot into how to run a business and tried to get out of the mentality that the labour charge = wages so that the business can start earning money to support me, rather than me supporting the business (if that makes sense?!). I also think the best way to ensure you’re profitable is to always keep sight of your worth and not undersell yourself.

Ryan, RJ Heating

FAQs

How can I increase my profits?

There are many ways to maximise your profits. Start by reviewing your expenses vs your revenue. Then look at ways to streamline your services and work more efficiently.

Is the break-even point important to making more profits?

Yes. Understanding how your finances work helps you know when to increase prices and where you can cut costs. Your break-even point is when money coming in matches money going out,

What trades are in high demand?

In the UK there is currently a high demand for all types of trade business. Some of the most in-demand include plumbers, electricians, mechanics, and construction workers.

Does diversity in a workforce help increase profits?

Absolutely. Having a workforce that mirrors your customer base can help you win more work. Customers will feel you understand them better. A diverse workforce with people from all backgrounds is likely to bring more ideas and wider skills to your business.

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Content disclaimer: This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer here.

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