Raising the bottom line – is there more to it?

There is no denying that the New Zealand economy is currently in a volatile place, and that business owners are under more pressure than ever. Supply-chain issues, political issues, climate issues, IT issues and labour issues have all resulted in higher inflationary environment, which has led to price increases left, right and centre, and the bottom-line of many small and medium sized businesses (SME’s) being squeezed.

So, what can SME’s do to mitigate the risk they face and improve their bottom-line?

We could tell you that you to need to increase your revenue by increasing your prices, that you need more transactions in order to make the same amount, or that you need to start cutting costs, and those are all very valid points. The problem with implementing these short-term measures though, is that they are largely out of our control, so we also need to dig a little deeper than that. 

In order to create a successful and sustainable business, and increase your bottom line as a result, you need to focus on 5 key elements. These are; great leadership, strong company culture, exceptional customer service, innovative and efficient operations, and clear / transparent information and financial awareness. 

Let’s break these down a bit more.

Great leadership

A great leader should be both inspiring and confident. They will bring the team together so that everyone can work together towards common goals and targets of the business, making the business more efficient and effective. A great leader will know that it’s most important asset of the business are its employees and will cultivate employee relationships within the business.

Strong company culture

Company culture refers to the attitudes and behaviours of a company and its employees. It is how they do, what they do. Studies have confirmed that employee happiness translates into employee efficiency, creativity, and productivity, which in turn, has the same effect on customers. 

Exceptional customer service

Let’s be frank. Most business success relies on building relationships of some sort. When you are consistently meeting your customers expectations, they will be much more likely to stick with you, or come back for your services when needed, which plays a big hand in building a consistent and recurring revenue base.

Innovative and efficient operations

In other words, your business needs to be more productive. Making your business systems and processes less time consuming with lead it to be less costly and will add to its sustainability. Working more innovatively and efficiently will also allow your business to adapt to the market more swiftly, which cushions against volatility and risk.

Clear transparent information and financial awareness

It is staggering just how many people are trying to run a business without having detailed knowledge or awareness on how it’s performing. Unless you have strong skills in this area, we would recommend you engage someone and get independent advice and support. At the end of the day, your business does need to be financially viable for it to be successful and sustainable.

In conclusion, although we don’t disagree that in some cases to increase the bottom line we may have to raise prices, increase our volume of transactions, and/or cut costs, as business owners we need to think beyond these quick fixes and focus on the long-term drivers of running of the business in order to succeed.