Maximise your wealth by optimising efficiency

By Mathew Forshaw, managing director, Finton Doyle.

As an owner, your business has two financial functions: it provides you with your current income, but it also funds your future wealth – this could be in the form of pensions and investments, the eventual sale of the business, or a combination of both.

Having an efficient an well-run business therefore is fundamental to maximising your wealth.

The first and perhaps most obvious area is your customers – without them there is no business, so looking after them is crucial. But it’s also crucial that you get paid appropriately for the work you do.

Clear and robust terms of trade, agreed by your customers, together with well documented collection procedures, will mean less time spent chasing money and more on growing the business.

But getting paid appropriately isn’t just about cash collection, it’s also about knowing that the price you charge will cover your costs, and give you sufficient profit. Having a high turnover is all well and good, but low profit margins can lead to long-term problems.

Profit margins can be improved by three things – higher prices, lower costs or greater efficiency, and the key to gaining control of these is good information. For example, are some of your products more profitable than others, or are your staff paid too much for the results they produce?

Good management information will help you to measure every area of your business and help you to identify which areas are going well and which need more work. This is the first step towards maximising the efficiency of your business, and ensuring that it looks after you both now and in the future.