Helpful Resources
  • Close

Request a Consultation

Supercharge Your Superannuation & Maximise Your Retirement Savings

Welcome back everyone. In the sixth and final part of my blog series, I want to discuss something that affects all of our financial journeys: Superannuation. Perhaps you’re concerned about your retirement savings? Or maybe uncertain about how to make the most .....

Strategy, Business - 3 min read

Is it more important for your business to decrease costs or increase revenue?

This is a recurring question for business owners, and there’s no one best answer for all businesses. So how can you decide whether to focus on lowering your costs or increasing your revenues?


Understand the Metrics of Profitability

It certainly helps to understand the basic metrics of profitability, especially the difference between profit and profit margin. If for example you reduce your fixed costs this should lead to a one off increase in profit, whereas a reduction in your variable direct costs should result in an ongoing benefit.

New Call-to-action

Keep an Eye on Quality

When a business focuses exclusively on one metric (decreasing costs, for example), they run the risk of compromising quality. If you lower the quality of your products or services in an effort to decrease costs, you could inadvertently degrade perceptions of your brand, and this can have far-reaching consequences.


Evaluate Your Current Processes and Conditions

If you’re currently operating at a comfortable level with room for decreasing costs or increasing revenue, you may be able to make adjustments without too much discomfort. If you’re already operating near maximum efficiency, however, decreasing costs may not be a reasonable goal.

Consider where you might have room for changes. Are you already getting the best possible prices on materials? Have you negotiated costs for your facilities and for personnel? How competitive is the pricing in your industry? Is the economy in your market booming, or is it depressed?  Can your processes be improved or can technology be employed to improve efficiency or capacity? All of these factors will influence whether or not there is room for decreasing your costs or increasing your revenue.


Consider Improving Your Branding

One way to increase your revenue is to improve the strength of your brand. If you can establish an identity for your business that commands higher prices, you may be able to increase your revenues significantly. 

Creative, effective marketing can have a huge impact on your branding, and many businesses find that their brand becomes very valuable over time, perhaps even more valuable than individual products. Create a unified marketing campaign that addresses customers’ needs, and flood the market with your images and messages.

As you make decisions about decreasing costs and increasing revenue, consult with an adviser who can help you to understand how these adjustments will affect your overall business operations.

For insight into the current state of your business' health, try our Healthy Business App by clicking below:

New Call-to-action


Could Your Business Benefit from an Outsourced CFO?

Set your business on the right path with this simple guide.

Could Your Business Benefit From an Outsources CFO_Resources

Prospective Business Owner - Succession Checklist

Make sure you’re on the right track with this online checklist.

Business Owner - Succession Checklist_Resources
Have a question for Paul Conaghan?

Connect with the author of this post and they'll get back to you.

close (1)