Boost profitability by choosing the right place to do business

April 14, 2014 9:07 am

How to boost business profitability by choosing the right place to locate

You are unlikely to find a guide that suggests how business property and location can help you boost profitability. Yet where you do business can be central to the success or failure of your enterprise.

Consider for a moment that there are four key areas all businesses look at when seeking to increase profitability. In no particular order, these are reducing costs, increasing turnover, increasing productivity, and increasing efficiency. All these aspects are linked to business property and location, as we’ll now explore.

Reduce business costs by being in the right place

Business costs include things like property rents and rates, utility overheads, wages and transport. When reviewing costs, you will look at finance, production and suppliers. Are you close to suppliers? If you are closer you could drive down supplier costs. Production – do you have the facilities you need to produce your product efficiently? Property will play a key part in this efficiency. Do you have sufficient space for your business needs? If you have too much space, you’re spending on room you don’t need. Perhaps you could sublet or downsize? Finally, finance may include sourcing grant support. Different areas of the country have different funds available, so it’s worth exploring where you could receive the most financial support for your business venture.

Increase business turnover through new markets and capacity

Your customers and the products or services they buy tend to fall into one of four categories:

  • High sales and high profit
  • High sales and low profit
  • Low sales and high profit
  • Low sales and low profit

Ideally you’re looking for customers that provide high sales and high profit. Or you might boost business profitability by nurturing customers giving you high profit on low sales. You need business premises that give you access to these customers, bearing in mind distribution costs. You can also look at expanding into new markets and perhaps developing new products or services. This requires that you have the business capacity, in terms of space, skill and resource, to do this. Again, does your business property give you this scope? Do you have the space and infrastructure you need to expand your offering?

Increase business productivity with the space to thrive

Make sure you monitor and measure the time and resource it takes to create your product or deliver your service. If it increases, communicate targets and incentivise staff. Consider staff training and analyse plant, software and other tools used in delivery. Are they efficient? Replacing or modifying could impact on space planning – have you got the business property that can accommodate this? Look at streamlining processes (see below). Train-maker Bombardier was able to invest in technology that significantly cut business costs after moving to more suitable premises – which you can read about here.

Increase business efficiency with a property fit for your needs

Take a step back from the day-to-day and analyse what you are doing. If there are better ways to do things, you need the space and overall infrastructure to implement it. Sometimes you may need more space, not less. It’s useful to get an idea about how comparable businesses approach similar issues. This is known as benchmarking. When looking at other businesses, note their property type and location – what does this say about them and how they do things? Established businesses should have found their ideal business property, so you can learn from them.

  • What have you learned from the business property you are based in? How does it affect the profitability of your business? If you have moved previously, how did this benefit? We’d like to hear your thoughts.

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