From ever increasing operational costs to wage inflations and supply chain disruptions, businesses across almost every sector are facing a similar challenge – tighter profit margins.
With growing pressure to do more with less, it’s essential that businesses are putting their money in the right places. To do this effectively, they must pay attention to the right data. So, let’s take a look at what insights businesses need to focus on to improve their profit margins.
Supplier and Procurement Data
Supplier performance can have a significant impact on margins. Businesses often fail to address inefficient delivery times or hidden costs that are heavily impacting profitability. Conducting regular supplier reviews or using procurement dashboards to ensure your chosen suppliers remain advantageous is crucial.
Workforce Analytics
While salaries are typically one of the biggest expenses for businesses, evaluating the cost of labour is often overlooked. But by leveraging tools such as payroll reports, businesses can identify overtime trends, flag scheduling inefficiencies, and monitor staff turnover rates with ease.
Additionally, payroll data can be cross-referenced with productivity metrics to establish whether labour costs are translating to adequate growth and revenue. For example, if a business notices an increase in staff but a decrease or plateau in performance, it may indicate an issue that needs addressing.
Customer Data
Having a thorough understanding of which products or services are driving the most traffic, generating the most leads, and producing the most revenue is critical. By utilising insights found in customer reviews and through website analytics, businesses can refine their offering, allowing them to focus their time, effort, and money on high-margin areas. This is particularly important for businesses with limited resources.
Industry Benchmarks
It’s important to compare your margins against your competitors and industry averages. Not only does this give you a reference point for your own success and allow you to set realistic business goals, but it also makes it easier to spot potential issues such as excessive overheads or underpriced products, which could be contributing to poor profit margins.
Businesses Should Be Reviewing Data Regularly
Gaining valuable insights and implementing data-driven strategies is the key to a successful business. Companies should be reviewing data regarding their customers, workforce, suppliers, and industry regularly. In doing this, businesses can spot important trends, identify opportunities for growth, recognise areas for improvement, and ultimately improve profit margins.
