2018-01-31 00:00:00How to Make More MoneyEnglishFigure out what you can do when sales growth isn't translating to a growth in your bottom line. Learn the most common problems causing...https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/02/Man-Giving-Tips-About-Sales-And-Bottom-Line.jpghttps://quickbooks.intuit.com/ca/resources/money/sales-bottom-line-growth/What to Do When Your Sales Grow but Your Bottom Line Doesn’t

What to Do When Your Sales Grow but Your Bottom Line Doesn’t

2 min read

While generating more sales is a common goal for businesses, your company isn’t necessarily more successful just because it’s selling more of its products. The number that matters is your bottom line, or net income, and not your total revenues. If your business has been posting higher sales with its bottom line staying about the same or even decreasing, then it’s time to find a strategy to correct that problem.

Evaluate Your Products and Pricing

One potential cause of a bottom line that isn’t budging is narrower profit margins. Look at the current products your company offers, and check the profit margins you post on them. Any of the following could lead to your profit margins getting smaller:

  • Lowering prices to attract more customers
  • Increased supply costs driving up how expensive it is to make a product
  • Expanding your product line with products that have narrower margins

If your business is struggling with its profit margins, then the optimum solution is trying to cut supply costs. Negotiating a bulk order rate is a good way to do this. Cutting products with narrow margins from your lineup is another option. Raising prices is the approach most likely to cause some ire with your customers. It is a valid choice, though, especially when you offer high-quality products that are worth the price.

Be More Efficient With Your Marketing Efforts

With all the ways to market your business, it’s easy to overspend. Many business owners who are focused on generating more sales end up rationalizing high customer acquisition costs as something that works itself out in the end. While you do often need to spend money to make money, you should still make an effort to spend smart and choose the most effective marketing methods.

To be more efficient with your marketing dollars, track the return on investment you get from all your marketing methods. Analytics can help with this. For methods that aren’t working, consider whether a change in strategy might help or if that method simply isn’t a good fit for your business or the target audience you’re trying to reach.

Keep Overhead Under Control

As companies grow in size, they often add unnecessary expenses under the belief that they can afford them due to their success. Even if your business is doing well, it’s good to stay in the same mindset you had when you were starting out and needed to be careful with your spending.

Go over your business’s usual expenses to see if there are any easy ways to lower overhead. Start by looking at areas where spending has increased. For example, if you’ve been spending more on employee travel, consider whether these costs are worth the money. After that, check out the rest of the expenses and brainstorm ways to cut these costs. You may be able to automate certain tasks that you’re currently paying an employee to do, or downsize your office and have some employees work from home.

While sales growth is something to be proud of, make sure you’re turning those extra sales into additional profits that boost your bottom line.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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