5. How to improve profit
•1.Reduce Costs
•2. Increase revenue
•3. By expansion
6. Reducing Costs
• If costs reduce, then profits should increase?
• You could
• Reduce your workforce by
• Losing workers
• Reducing managers or highly skilled individuals who get paid
the most
• Automate some jobs
• Contract out the work to others
• Cut wages
• Buy cheaper stock
• Order in bulk
What else could be done?
7. Increasing Revenue
• To increase profit you could :
• raise prices
• Increase sales (increasing the volume of sales)
• Advertising
• Sales promotions
• Attracting new markets
• Reducing Prices
• Introduce new products
What else could be done?
8. By expanding
• Profits could increase by expanding your firms ability to
make more revenue (p313 – read)
• Internal expansion
opening a new location to do the same as you do.
• External expansion
Taking over another firm combining businesses.
9. TASK: what ways could profit be
increased for these business owners?
• Toni has a fruit and veg shop, he wants to
increase profits over the next 10 years so that
he can eventually help his daughter pay for
university.
• Sam owns a hairdressing saloon but wants to
sell his business to buy and sell real estate. He
wants to make as much money as he can in 6
months before he decides to sell the business.
How would decisions for improving profit vary
for Toni and Sam?
