Increasing profitability of activities. Increasing the profitability of an enterprise is the key to its stability. Assessing the profitability of attracting investments

Advice from an Expert - Business Consultant

Photos on the topic

The most accurate assessment of the functioning of any company is provided by profitability, which is not just a calculated, statistical parameter, but a complex socio-economic complex criterion. It characterizes, in contrast to profit, efficiency financial activities each individual economic entity. Profitability means profitability, profitability of an enterprise. It is calculated by comparing profit or gross income with the resources or costs used.

Just follow these simple ones step by step tips, and you will be on the right track.

Quick step by step guide
So, let's get down to action, focusing on the result.

Step - 1
Profitability shows how profitable the activity of an enterprise is, therefore, the higher the profitability ratio, the more effective the activity itself. Accordingly, the company should always strive for the highest performance, and management should identify ways to increase profitability.

One of the conditions for the effective operation of the organization is to expand the sales market for the products offered by reducing prices for manufactured goods. Also Special attention deserve internal factors of the enterprise: increasing production volumes, reducing production costs, increasing the return on fixed assets.

Having done this, move on to the next steps.

Step - 2
When the profitability of an enterprise is low, it is necessary to accelerate the turnover of assets. The return on equity capital can be increased by increasing the share of total capital borrowed money. At the same time, the profitability of assets becomes higher when the profitability of products becomes higher, the return on all non-current assets and the turnover rate of these current assets will also be higher, when the total costs per unit of production and the costs of fixed assets are lower. economic elements(materials, means of labor). Having done this, move on to the next steps.

Step - 3
The influence of individual factors cannot be considered abstractly, because the dynamics and level of profitability indicators are influenced by the entire set of production and economic factors: the degree of use of all production resources; level of organization of management and production; the structure of capital itself, as well as sources; quality, structure and volume of products; costs of product costs and production; direction of use of profits. Having done this, move on to the next steps.

Step - 4
Profits can be directed to the formation of consumption funds and accumulation funds, contributions to reserve capital, diversion for charitable purposes in order to expand the activities of the organization at the expense of its own funds. However, there is another alternative - you can invest your own funds V securities other larger companies, for example, form an investment portfolio and competently manage it in order to receive income after some time, which can be invested in your company to improve competitiveness and financial condition enterprises.
We hope the answer to the question - How to increase profitability - contains information useful to you. Good luck! To find the answer to your question, use the form -

As noted above, profit is the final indicator of the activity of enterprises in the industry. This is also the most important economic indicator. However, profit does not show or characterize at what price it was achieved or with what amount of funds. Profit does not reflect the size of the production potential with which it is obtained.

To compare the amount of profit and the amount of funds used to achieve it in a sectoral economy, the indicator of profitability of production is used.

Profitability of production is the most general, qualitative indicator of the economic efficiency of production, the efficiency of functioning of enterprises in the industry. The profitability of production precisely commensurates the amount of profit received with the size of those funds - fixed assets and working capital, with the help of which it was obtained. These means used in production to obtain a certain profit are, as it were, its price. And the lower this price, i.e. the less funds required for the same amount of profit received, the, of course, production is more efficient, and the enterprise operates with great efficiency. All of the above is true in the absence of a fixed profitability, approved in a number of regions to maintain a certain price level. Over time this should not happen.

Profitability of production in itself general view in sectoral economics is defined as:

where P is profitability, %

P - amount of profit, rub.

OF - cost of fixed assets, rub.

OS - cost of working capital, rub.

The period of operation of an enterprise can be different - a month, a quarter, a year, and therefore the cost of fixed assets and working capital is calculated at an average value. The profitability of production can generally be determined in any time range, during any period of target operation, in order to know the effectiveness of the production operations carried out. As a rule, with stable operation it is calculated per quarter and per year.

In industrial economics, a distinction is made between general and estimated production profitability. The overall profitability is almost identical to the previously determined profitability:

Profit is taken in the form of a total, balance sheet amount, and the cost of working capital was determined up to its standardized part, which is incorrect. It is necessary to take into account the entire used value of working capital - own and borrowed.

Estimated profitability as an indicator of efficiency has lost its meaning and essentially does not have any practical significance. It can only characterize at what price and by what amount of funds the profit remaining at the disposal of the enterprise was obtained.

Of much greater interest is the indicator of product profitability, calculated as the ratio of profit to the total cost of production:

where Ri is product profitability, %

P - profit from sales of products, rub.

Sp - total cost of production, rub.

If there is only one product, then the formula takes the form:

where C is the unit price of the product

Cn is the total cost per unit of this product.

And the profitability of all sold (produced) products is calculated as the ratio of all profit received from the sale of products to the total cost products sold.

This indicator is very important for making current and strategic decisions. During the analysis, this indicator shows the profitability or unprofitability of manufactured products, the degree of their profitability and unprofitability. In the market where the goal entrepreneurial activity- obtaining maximum profit, the enterprise, after such an analysis, must make an appropriate decision - get rid of unprofitable and low-profitable products and, conversely, increase highly profitable types of products. If the industry is subsidized or individual products are subsidized, then certain adjustments should be made.

Cost-benefit analysis individual species products, as well as its entirety, will help to identify internal reserves for reducing production costs, ways to improve product quality for a possible corresponding increase in prices, which in any case will increase the profitability of products, and therefore improve the financial, socio-economic situation of the industry enterprise.

As can be seen from the general formula for production profitability

its growth factors will be:

1. Amount of profit

2. Cost and efficiency of use of fixed assets.

3. Cost and efficiency of use of working capital

The higher the profit, the lower the cost of fixed assets and working capital it is achieved and the more efficiently they are used, the higher the profitability of production, and therefore the higher economic efficiency functioning of the industry. And vice versa.

Thus, from the factors of production profitability, the main ways to increase it follow.

In industrial economics, the most general ways to increase production profitability include the following.

1. All ways that increase the amount of profit.

2. All ways to improve the efficiency of use of fixed assets.

3. All ways to improve the efficiency of using working capital.

In economic practice, many specific profitability indicators are used. They all play a certain role in the economy. However, for sectoral economics, for a general view of economic processes The indicators presented here are quite sufficient and correct.

In a normally functioning economy, the level of profitability of production in industry is within 20-25%, and agriculture - 40-50 %.

Introduction

Profit is a multi-valued economic category. The effectiveness of commercial calculations, pricing and other economic levers of management depends on the depth of its knowledge and rational use. Being a source of production and social development, profit occupies a leading place in ensuring the self-financing of enterprises and associations, the capabilities of which are largely determined by the extent to which income exceeds costs.

Profit is a generalized effective indicator of the production and financial activities of an enterprise and the source of financial savings is profit. There is a lot of convincing evidence in the economic literature important role profit as an indicator that expresses long-term development goals economic activity enterprises; acts as a source of vital activity for the enterprise, the basis for self-financing of the enterprise’s activities.

But in order to assess how efficiently an enterprise uses resources, it is necessary to correlate profits and costs, that is, determine profitability.

Analysis financial results allows you to identify reserves for increasing profits and profitability of the enterprise.

As a result, profit analysis is important practical solution. It allows you to identify the main factors of its growth, efficient use resources, potential capabilities of the enterprise, as well as determine the influence of external and internal factors on the amount of profit and the procedure for its distribution.

The purpose of the work is to analyze the profit and profitability of the enterprise Stroymaterialy LLC and find ways to increase them.

To achieve this goal, it is necessary to solve the following tasks:

studying the essence of profit and the main indicators of profitability;
identifying the main economic factors affecting profit and profitability indicators and their analysis;
identifying ways to increase profitability at Stroymaterialy LLC.

The essence of profit, its functions, types

Indicators of financial results characterize the efficiency of the enterprise's management. The most important such indicators are profit and profitability.

Profit is one of the main indicators of planning and evaluation of the financial and economic activities of an organization.

Profit is the final result of entrepreneurial activity, in general terms representing the difference between revenue from sales of products and the cost of products sold.

Profit is formed by comparing income and expenses. The organization's income and expenses are presented in Fig. 1.

The essence of profit is expressed in its functions. The profit functions are presented in Fig. 2.

When costs exceed revenue, a business entity receives losses - this is an area of critical risk, which puts the business entity in critical financial position, which does not exclude bankruptcy. However, they also play a role. Losses highlight errors and miscalculations in the use of funds, organization of production and sales of products.

Consequently, profit is a source of income not only for the enterprise, its owners, employees, but also for the state. That is, the more efficient the economic activity, the greater the profit and, therefore, the more funds can be used to finance expanded production, social development and material incentives for workers.

Analysis of profitability indicators

Profit indicators characterize the absolute efficiency of the enterprise's economic activities. However, the effectiveness and economic expediency functioning of the enterprise. It is assessed not only by absolute, but also by relative indicators.

Therefore, to characterize the financial condition of an enterprise, it is advisable to compare the amount of profit received with the cost of those elements that contributed to its receipt. This is achieved by using the profitability indicator. Profitability is a relative indicator that characterizes the degree of use of the resources available to the enterprise and the efficiency of these costs.

The economic essence of profitability can be revealed only through the characteristics of the system of indicators (see Table 1).

The results of the analysis of profitability indicators are summarized in Table 6:

Table 6 -- Key profitability indicators

Indicator name	Indicator value	Deviation (+-)	Growth rate, %


Sales revenue, thousand rubles.
Total cost of products sold, thousand rubles.
Profit from sales, thousand rubles.
Balance sheet profit, thousand rubles.
Average total assets, thousand rubles.
Average value of non-current assets, thousand rubles.
Average equity capital, thousand rubles.
Average value of long-term liabilities, rubles.
Return on sales, %
Profitability of core activities, %
Return on assets, %
Capital return, %
Return on equity, %
Return on permanent capital, %

Table 5 shows that in 2007, compared to 2006, there was an increase in almost all profitability indicators, except return on equity. This figure in 2007 decreased by 0.18%, which is assessed negatively, since it indicates a slowdown in the turnover of the enterprise's equity capital. Return on sales in 2007 compared to 2006 increased by 2.01%, which indicates an increase in the efficiency of using the resources available at the enterprise.

There was also an increase in the profitability of core activities by 2.68%, which indicates an increase in the efficiency of resource use.

Return on assets increased by 0.04%, which indicates an increase in demand for manufactured products; therefore, the company has a guarantee that its products will be sold.

Since in 2007 the capital profitability indicator also increased by 0.27%, therefore, the enterprise’s efficiency in using fixed assets, as well as other non-current assets, increased.

An increase in the profitability of permanent capital indicates an increase in the efficiency of use of capital investments.

Ways to increase profitability

Growth factors for any profitability indicator depend on common economic phenomena and processes. This is first of all:

Improving the production management system in conditions market economy based on overcoming the crisis in the financial, credit and monetary systems;

Increasing the efficiency of use of resources by enterprises based on stabilization of mutual settlements and the system of settlement and payment relations;

Indexation of working capital and clear identification of the sources of their formation.

An important factor in the growth of profitability in the current conditions is the work of enterprises to save resources, which leads to a reduction in costs and, consequently, an increase in profits. The fact is that the development of production by saving resources on at this stage much cheaper than developing new deposits and involving new resources in production.

Reducing costs should be the main condition for increasing profitability and profitability of production.

Profit as the main result of entrepreneurial activity meets the needs of the enterprise itself and the state as a whole. The amount of gross income is influenced by a combination of many factors, both dependent and independent of business activity.

Important factors for profit growth that depend on the activities of enterprises are:

Increase in the volume of manufactured products in accordance with contractual terms;

Reducing its cost;

Quality improvement;

Improvement of assortment;

Increasing the efficiency of using production assets;

Increased labor productivity.

Factors independent of the activities of the enterprise include:

Changes in state regulated prices for products sold;

The influence of natural, geographical, transport and technical specifications for the production and sale of products, etc. - changes in the tax and depreciation policies of the state.

From this article you will learn:

How to achieve high profitability business in sales

What rules exist to increase business profitability?

Today you can find a huge amount of literature and trainings containing answers to the question that worries every entrepreneur, namely - how to achieve high business profitability. However, not all advice from experienced businessmen is universal: it is unlikely that you will find a magic scheme that will instantly solve existing problems with profitability. Nevertheless, a couple of tips on the level of profitability of a business will not harm anyone, especially when it comes to beginning businessmen.

Why is it necessary to achieve high business profitability?

Return on sales in a business is based on the percentage of profit from each unit of money earned. Therefore, return on sales is the ratio of the net profit of a business to the amount of revenue from product sales multiplied by 100%.

A visual formula for calculating profitability of sales:

Return on sales = net income/sales x 100%.
Return on sales = operating income/revenue x 100%.

To better understand what constitutes business profitability, you need to have an understanding of the following:

Return on sales makes it possible to see the real picture of sales of the main products of a business. Additionally, the share of cost in general scheme sales of goods.
Sales profitability is an excellent help in controlling the company's pricing policy and costs. Each firm has different strategies and techniques, so their profitability ratios tend to be unequal, even when they have the same revenue, operating income, and pre-tax profit.
Return on sales does not show the planned effect of long-term investments. When a company wants to change technological system or purchase innovative equipment, the business profitability ratio may decrease slightly. However, with the right modernization strategy, it will quickly return to its original values or even increase.

What mistakes will prevent you from achieving high business profitability?

It often happens (namely in 85% of cases) that a businessman is ready to close his company if it is unprofitable or the profit received only covers expenses. Typically, such indicators are typical for small and medium-sized businesses in the first year of existence. However, according to statistics lion's share The reasons why a company is operating at zero or making losses are the shortcomings or mistakes of these same entrepreneurs when doing business.

Business planning mistake. When a businessman himself undertakes planning, he prescribes potential expenses with a wide range. But we must remember that both overestimating and underestimating them is critical, since in case of overestimation, the businessman has to withhold those amounts that could be useful to him for another expense item. A good example: an entrepreneur plans to start an advertising campaign soon, but having spent much more on it more money than he actually needs, he will have to take money from another expense item, for example, from money for workers’ salaries.

In the question of how to achieve high business profitability, you need to constantly go back a little and reconsider the decisions that were made earlier.

The second common mistake of novice businessmen lies in unjustifiably lowering prices for their services or goods. Often a businessman really wants to show that his approach to pricing is very democratic, while forgetting about turnover, which is only indirectly related to issues of pricing policy. And reducing prices without spending on marketing business promotion most often nullifies all the efforts of the company. When advertising campaign was carried out, and this led to an increase in consumer flow, its further decrease may be caused by the actions of competitors who have taken similar actions.

The third stage in deciding how to achieve high business profitability is the need consideration of labor productivity. Criteria such as the qualifications of employees, their skills and level of motivation in increasing the company’s turnover have a fairly strong influence on the business. The easiest way to motivate staff is financially. The ability to take tips for yourself will increase the friendliness and helpfulness of the waiters; paying a percentage of the proceeds to the seller will make him recommend more products to the buyer.

Another productive option: the possibility of constant financial growth and a clear identification system best workers. All kinds of “Honor Boards”, payment of bonuses at the end of the month, gifts for the holidays are effective.

The main stereotype hindering business development is clearly no advertising. No one will argue that a successful product and business does not really need active promotion, but even a very profitable enterprise at some point may find itself in a situation where the marketing activity of competing companies forces the buyer to go over to their side. Here it is already necessary to focus on correct and effective marketing promotion of the business.

How to achieve high business profitability

It is very effective if your company can offer a choice of regular and VIP products. Book sellers usually turn to this scheme, offering to purchase not only a regular book for 250 rubles, but also a more expensive one in gift form, for example, for 1,500 rubles.

An excellent option was offered by a lighting store: to increase sales margins, the store began offering standard lamps along with economical LEDs and a control panel. This configuration is more interesting and attractive for the buyer, despite the fact that its cost increased by 15–20%, the profitability became 30%.

When placing an order, you must offer related products. This quite effective scheme is used successful online stores. The user flips through the catalog, and in parallel it is shown, for example, additional product, which is called the “ideal pair”: for example, when ordering a bag, the service itself will make a selection of accessories that harmonize with it.

It is necessary to regularly update the assortment, replenishing it with new products, which, as a rule, are more expensive than products from previous collections.

Keep statistics. Somehow network managers shopping centers analyzed the profitability of the brands in our catalog. They compared the level of sales before and during the sales. The analysis revealed brands with the highest level of profitability. After that, three groups of brands were identified - with good, average and best profitability. Thus, the store was able to identify brands with high profitability, and their share of purchases increased. This resulted in return on sales increasing by 12%.

Offer exclusive. If you offer exclusive offers, it can significantly increase revenue compared to standard offers. This is, for example, exclusive production of goods and designer products. For example, a lighting manufacturer was able to increase profitability by 30% to reach 60%.

How to achieve high business profitability: 6 ways

Selling a product with a higher price.

Initially, you should interest the buyer in a good and inexpensive product from China: he will be happy with such a purchase. But such profitability cannot be called high, and making a good markup is also problematic. Therefore, you need to sell goods at a higher price category, and in order for the profitability of their sales to be high, you need to focus on building personal relationships with the client. Therefore, you need to find out what the buyer thinks about such a product.

A striking example can be given: some time ago, a successful franchise found itself in a difficult situation - customers began to purchase inexpensive subscriptions to short time. Because of this, the hall was constantly crowded, but the revenue that was expected according to the plan could not be obtained. Then the hall stopped selling single passes and doubled the cost of a three-month subscription. That is, the focus has shifted to long-term subscriptions. Thus, the hall maintained the prices for subscriptions and even increased the number of visits provided for them.

Two more services were added: installment payment for those who purchase a subscription to long term, and providing clients with guest bonuses. What does this mean: each client can invite friends to training completely free of charge. Typically, after such a guest visit, the client purchases a subscription for several classes.

Motivation of managers.

To make a sale at a low price, the manager must contact the commercial director or head of the sales department for approval of an additional discount. Then high business profitability can be achieved with the help of plans for further work with promising clients or the promise of large orders, but not the manager’s desire to achieve the plan by all means.

The manager's monetary incentives must be made dependent on his fulfillment of the business sales profitability plan. For example, the percentage of sales provided by the company should be multiplied by a certain coefficient; such a scheme will help motivate managers to fulfill the plan. This indicator can range from 1 to 1.2. And, let’s say, if the intended result is achieved, the coefficient will be equal to 1, and if it is exceeded, it will be 1.2.

Managers need to explain that it is more productive to sell the most profitable products (their price is 2-3 times higher than the price of other products). And to solve this problem, you can set bonuses that will be awarded when they are sold.

Service level.

To achieve high business profitability, you need to increase the value of goods by increasing their cost.

To increase the value of goods, you need:

Provide free shipping.
Establish clear deliveries.
Train partners in sales.
Simplify the ordering process through the company’s website, place Personal Area for wholesale buyers.
Hire friendly and competent consultants (or train those already employed).

Increasing the number of goods on a receipt.

You can achieve high business profitability by expanding the check - this is an important parameter for the seller. This can be most clearly shown using the example of sales in the b2c market.

You can increase the number of goods in the check if you take the client’s place: it is important to assume what problems the purchase of products may involve, or what, on the contrary, will interest him (that is, what related products can be expanded to the check). It is important to take the initiative: the buyer’s trust is precisely manifested in the fact that he makes a purchase from you. How more sales you complete, the easier it will be to carry out each subsequent one.

Reduce costs.

When agreeing on a spending budget, exclude things that will in no way affect the increase in sales: for example, participation in exhibitions. Instead, we will focus on relationships with consumers, including potential ones. Conduct targeted mailings, individual presentations, etc.

Increase in product prices.

A method that requires extreme care in its implementation. You need to understand that significant changes in the pricing policy in a business can cause stress for customers, so they may choose to purchase a more stable product. But even with the increased price trademark there will still be buyers who are ready to pay literally any money for its products.

How is return on sales calculated?
How managers can calculate return on sales and how to increase this indicator
How to use sales profitability to control pricing policy and costs in an organization’s activities

Return on sales most often calculated using one of the following two formulas:

return on sales = net profit: sales volume × 100%;
return on sales = operating profit: revenue × 100%, where operating profit = gross profit – operating costs.

I prefer to use the second formula, so I strive to optimize the indicators involved in it. Until now, a number of managers, to increase the profitability of sales, use only the “old grandfather’s method” - raising prices. But this method is suitable for monopolistic companies.

you spent on potential client a lot of time, money and energy, and the answer was: “I need to think.” What to do? Perhaps you need to start with what not to do.

We have selected 8 ways to deal with objections and increase company sales. You will also find a checklist for checking actions.

Working for competitive market, we use a wider range of tools, which allowed us to increase our return on sales by 41.74%. Let me make a reservation right away that each of these methods should be used only if the costs of it do not exceed the benefits from its use.

YOU HAVE AVAILABLE VIDEO OF ALEXANDER LEVITAS' MASTER CLASS

"GUERILLA MARKETING: BASICS OF MARKETING WITHOUT A BUDGET."

How other companies managed to increase profitability of sales

Offer a choice of regular or VIP product. This is what booksellers do, for example, offering a paperback book for 200 rubles. or a gift edition of the same book in a beautiful hardcover for 1500.

Add additional features. At Natali Kovaltseva, in order to increase sales margins, economical LEDs and a control panel are added to the standard modification of the lamp - these details increase the value of the product in the eyes of the consumer. As a result, the cost of the batch increases by 15–20%, and profitability by at least 30%.

Select “companion” products and offer them when placing an order. This is what many online stores are doing now. For example, if you are looking at the description of a pair of shoes in the Sapato.ru store, next to the image of the product you are interested in you will see the inscription “Perfect Pair” - the store automatically selects several bags that match the style of these shoes.

Launch new products more often. As a rule, new items are more expensive than samples from the old collection: the market is not yet saturated with them, so you can set a higher price than previous models without regard to competitors. Therefore, the margins of new collections are higher.

Keep statistics. In 2007, a clothing chain analyzed the profitability of the brands it sold by comparing sales results before and during the sale. The analysis made it possible to identify brands with higher margins. Then all brands were distributed into three price ranges, called better, middle and good (English: best, average, good). As a result, the company identified brands with higher profitability and increased their share in total purchases. At the end of 2008, the company's revenues increased by 12%.

Offer an exclusive. The development and production of exclusive collections brings the company more profit than the sale of standard products. For example, fulfilling an order from a large hotel, the Natali Kovaltseva company selected lamps based on the latest collection of an Italian manufacturer. The models were processed (the lampshades were changed, different crystal was used), but these products were produced at the same production sites as other products. If lamps from the standard collection were installed at the facility, the margin would be about 30%. The author's design and exclusive execution allowed the company to increase margins to 60%.

Ways to increase sales profitability

Method 1. Price audit

We determine the likely price at which competing companies supply a similar product to their customers (often our customers), based on the shelf price of the product (including markups and bonuses). Having calculated the delivery price, we compare the product with ours (if, for example, we are talking about jamon or cheese, their aging, waste rate, etc. are compared). Depending on the comparison results, we make an offer to the client; it can be either cheaper or more expensive - if our product is better in some respects than that of a competitor. All company employees are constantly collecting information. Our owner sometimes comes and says: “I saw such and such a product there, the shelf price is such and such.” This information is then sent to the sales director and the specialist responsible for pricing for processing and subsequent analysis. Price audit data is a reliable guide, as well as a good argument in price negotiations with manufacturers.

Method 2. Analysis of marginality in relation to different categories of goods and customers

This is constantly done by the specialist responsible for pricing. The analysis consists of determining the profitability of each product item (the weighted average delivery price for different categories of customers is compared with the purchase price and the price in the warehouse). Duties, VAT, shrinkage, etc. are also taken into account. As a result, we get different margins.

The analysis allows us to divide all products in terms of their marginality into three types (low-, medium- and high-margin). In addition, different clients cooperate with us on different conditions: some have bonuses, others do not; Some clients pay in advance, others use deferment. As a result, from a client with greater preferences (for example, with a longer deferment), we will receive a larger gross profit, but by increasing operating expenses we will achieve an average profitability indicator. Therefore after primary analysis assigned for different categories of clients different levels prices This policy allows us to ultimately get the weighted average price that suits us.

Declining consumer demand: 5 tips to save profitability

A practitioner tells

Irina Chirva, Co-founder management company chain "Tonus Club", St. Petersburg

One of our most experienced franchisees found himself in a difficult situation: customers preferred the cheapest subscriptions - short-term ones, so the club was overcrowded, and it was not possible to collect the planned revenue. After analyzing the situation, the elasticity of demand and the characteristics of the audience, we offered the franchisees to optimize the club’s price list, bringing it into line with current network standards. To do this, they eliminated the one- and two-month subscriptions that were actively sold in this club, but were not profitable in the long term, and also canceled the possibility of one-time visits. Then the cost of a three-month subscription was doubled. In order to retain customers and even attract them to the club for a longer period, we left the price of annual passes at the same level and increased the number of classes included in the price of the subscription. In addition, the club began offering those who bought season tickets for a long time an installment plan. The last step was the introduction of guest bonuses, which gave each client the right to invite their friends to the club (according to our network statistics, the majority of those who came with such an invitation subsequently purchased their own subscription). It would seem that the increase minimum cost visiting the club should discourage customers. But the revision of the price list was carried out with an understanding of the needs of the audience, and therefore made it possible to increase the club’s monthly profit by a third.

Method 3. Motivating managers

We stopped demanding that managers sell as much as possible, and for the second year now our sales departments have been focused on a certain level of margin. Let me explain how this works. Even before negotiations, our specialist goes to the client, studies his product range and conducts a price audit. Then, using special add-ons in 1C, the employee predicts the client’s likely sales volumes and receives margin data to compare them with the average for this category of clients. Only then, taking into account a lot of factors, is the specialist ready to make an offer that will suit both the company and the client. If we subsequently observe deviations from the predicted sales volumes of a particular product, we offer the client a new solution.

Incentive bonus for which employees will work better and better

Four ways to influence managers to sell for more profit

1. Fix the maximum discount percentage. To sell cheaper, the manager will have to agree on an additional discount with the head of the sales department or commercial director. Then all less profitable sales will be due to plans for further collaboration with a prospective client or the buyer's promise to place a larger order, rather than the manager's desire to fulfill the plan at all costs.

2. Tie the manager's bonus percentage to the implementation of the sales profitability plan. The sales percentage accepted in the company can be multiplied by a certain coefficient so that the manager is motivated to fulfill the sales profitability plan (this coefficient can vary from 1 to 1.2, for example 1 for fulfilling the plan, 1.2 for exceeding it).

3. Calculate the variable part of the salary as a percentage of simplified gross profit from payments received. For example, when selling a product worth 1 million rubles. without discounts, the margin will be 200 thousand rubles, with a 5% discount - 150 thousand rubles, etc. Based on these indicators, it is worth accruing bonuses.

4. Give the manager an incentive to sell particularly profitable products. To do this, you can assign bonuses for the sale of such goods that are two to three times larger than for the sale of other assortment items.

Method 4. Working with manufacturers

We sell exclusively Spanish products, and the price of delivery from manufacturers is always fixed in contracts. To prevent the supplier from arbitrarily raising the price, we include a “Cost Structure” section in the contract. Having accepted the terms of this section, he cannot increase the price more often than agreed in the contract and without clear reason. Here's an example. The supplier says: “Electricity costs have increased by 10%, so we are raising the price by 10%.” And the contract states that the share of electricity costs in the cost structure is only 5%. Consequently, the price of the final product can only rise by 0.5%.

A separate topic is transfer prices (they can be set only if you have an agreement with the manufacturer strategic partnership or common owner). Imagine the situation: so many units of some product are shipped to you, you start selling it as low-margin, at a certain moment prices on the market go down, and you incur losses. The natural desire is to remove this product from the range. But if you and the supplier are strategic partners, you can sit down at the negotiating table, find out its profit margin (for example, 20%) and agree to reduce it (for example, to 10%). We started using this method last year, wanting to remove from the assortment a number of items that were dragging down the sales profitability indicator. It was impossible to raise the price: it would become uncompetitive. As a result, we convinced the manufacturer to reconsider the profit margin for these items, and everyone was happy. Independent suppliers are rarely willing to disclose profit margins. If you do not pay due attention to negotiations with manufacturers, you can suffer serious losses. For example, in 2009 prices changed four times, and it was very difficult for us to work. Now everything is simpler.

Sales system: step-by-step methodology for construction and optimization

Ways to reduce operating costs

Method 5. Managing customer product flows

In 2010, we opened a mobile merchandising department, whose employees monitor the product flows of our clients, including the availability of goods on the shelf and their stock in the warehouse. The day before the order, merchandisers remotely enter all data about the situation with clients from a PDA into our 1C system, where the Mobile Merchandising application is installed. Let me give you a simple example. Let's say, according to assortment matrix There should be 10 units of a certain product on the shelf, but there are only three units, and two more in the warehouse. Therefore, the probable supply quantity is five units. The next day we receive an order containing only one unit. Before entering the order into the system, the manager calls the customer and tells him that he should order four more units. The work of merchandisers according to this principle allowed us to cope with the lack of goods on the shelves and reduce the number of returns. Monthly costs for this division, where 15 people work, amount to 450 thousand rubles. (excluding one-time costs for equipment, but taking into account the costs of salaries and taxes). The increase in operating costs for maintaining the merchandising department is offset by a decrease in operating costs due to a decrease in the number of product losses and an increase in gross profit.

Method 6: Cutting costs

By approving the spending budget, we exclude everything that is useless - that which does not contribute to sales growth. In particular, they refused to participate in exhibitions. The company has found more effective and cheaper ways to target potential and existing customers. For example, targeted mailings, as well as individual presentations at certain periods (before the seasonal change of menu in restaurants, when launching new products and during the time when the customer matrix is updated). We invite clients to chef master classes and meetings with representatives of manufacturing companies, without linking these events to exhibition dates.

Method 7. Improving the service

Our customers value regular deliveries, fixed prices, correct design accompanying documentation and accurate execution of the order. Thus, to ensure regular deliveries, we provide major manufacturers with access to data about our inventory and to sales plans - this allows manufacturers to clearly plan inventories of raw materials and other Supplies and prevents disruptions in the production of products according to our orders. In order to be able to fix prices for clients, we determine a corridor for fluctuations in the exchange rate of the currency in which supplies are paid for six months to a year. If the rate remains within the corridor, we do not change prices.

Currency risk management: how to protect your business from rising dollar and euro rates

Increasing profitability of sales: experience of a window manufacturer

Maxim Iskrenev, Deputy General Director Trend Group, Moscow

Several years ago I moved from a small manufacturing and trading company operating in the window market to a larger large company the same profile, having taken a position executive director. At first glance, the company was doing well: there were many orders, production volumes were growing. However, having delved into the details, I concluded that the company’s position was precarious.

In this article, I will tell you why the seemingly healthy sales situation gave me cause for concern and what was done to strengthen the company's position.

initial situation

These are the problems I discovered after analyzing the sales system.

1. The company sought to include any new products in its assortment, and therefore often changed priorities, expanding its product portfolio.

2. The work of the enterprise was not systematized - many internal regulations were perceived by employees as recommendations, the implementation of which is not obligatory for everyone. Therefore, the company could not predict its successes - and therefore, ensure their stability.

3. Top management lacked managerial experience, which often resulted in a serious gap between planned and actual sales results.

4. All attention was paid to sales volume, while profitability was not regulated - goals were set without setting strict thresholds for such important parameters as, for example, production costs and the level of profitability of sales.

5. The company easily attracted new customers, but had difficulty retaining old ones: the head of the sales department was focused on increasing gross income and did not pay enough attention to maintaining relationships with existing customers.

The situation was corrected in two stages.

First stage. Introduction of new working principles for sales managers

1. Regulation of the sales process. Internal regulatory documents have been revised - instead of standard provisions (very voluminous) poorly adapted to the conditions of our company, we introduced short ones step by step instructions for each of the main operations. Moreover, they were adopted “in the third reading”: first, line managers prepared preliminary versions of the documents, then amendments were made to them at working meetings, and finally, general meeting The final versions were agreed upon with the participation of representatives from production, delivery services and finance.

2. Linking bonuses to the profitability of the transaction. We linked seller bonuses to profit, and not to sales volume, as was the case before. To encourage managers to promote more expensive window systems that bring higher margins to the company, we have increased the bonus for their sales. In addition, a reduction factor was established for each manager, which affected the entire bonus part - it was applied if the employee fulfilled his sales plan without achieving a given level of profitability. Now the employee could sacrifice profitability to retain one customer, but was required to recoup those losses by selling to others at a higher profit. After this, the monthly income of managers who actively sold marginal products increased by an average of 40%. Our record was set the best seller, who once earned as much in a month as he previously earned in two and a half.

3. Introduction of bonuses to ensure customer loyalty. As you know, working with an old client is more profitable than working with a new one: attracting a new customer requires costs from the company. To increase customer loyalty, thereby increasing sales profitability, we have established several rules.

Bonuses to sales managers were now awarded only after signing a certificate of completion of work (and not after signing and paying for the contract, as before). In this way, we ensured that employees were more attentive to customers right up to the end of installation. After all, if the customer is satisfied with the service, he becomes loyal.
A specially appointed employee was tasked with surveying customers by phone the day after installation to find out whether they were satisfied with the work of the sales manager, the installation team and the company as a whole. The size of the bonuses depended on the results of the survey. For example, a sales manager about whom a client gave a negative review could lose up to 25% of his bonus.
The manager and foreman of the installers received additional bonus, if a new buyer came on the recommendation of an existing client. The bonus was 10% of the bonus accrued for working with the customer who made the recommendation.

The listed measures helped increase sales profitability by 30%. In addition, the number of destructive conflicts arising due to unclear distribution of areas of responsibility between sales managers and other employees has significantly decreased.

Second phase. Assortment adjustment

As a result, even leaving unchanged such indicators as production volumes, product prices and headcount, we were able to increase the company’s profitability. We were able to further increase our sales profitability by changing our assortment and pricing policy.

1. Freezing the assortment. We decided to stop launching new products, as it destabilized the activities of the transport and purchasing departments and resulted in constant stress for the production department, which did not have the ability to plan production volumes.

2. Refusal to produce economy class products. We have abandoned the production of standard plastic windows And sliding systems glazing of balconies, since this market was highly competitive, and the competition in it was only going to intensify. The acceptable margins of these products could be maintained by switching to cheaper components, which would inevitably affect the quality.

3. Production of profitable products. Having abandoned less profitable products, the company focused on the production of high-margin aluminum systems used in construction (facade systems, entrances, etc.). Thus, we have placed our bets on taking a strong position in the b2b segment. For private customers, only the production of the most profitable products was retained - high-quality windows and winter gardens.

The company's sales profitability almost doubled.

Copying material without permission is permitted if there is a dofollow link to this page

It might be useful to read: