As a business owner, you would never accept a full-time employee sitting in your office and only being utilized for part-time hours. However, when it comes to assets, we often aren’t as strict. The key to profitability in small businesses is to maximize the usage of your assets. This means generating as much profit as possible from your existing equipment before investing in new equipment or scaling up. Here are six strategies to help you get the most out of your assets and boost your profits.
1. Sublet Unused Business Premises
If you've taken on a business premises that's larger than your current needs, consider subletting the unused space. Subletting can help you bring in extra income and reduce the financial burden of a bigger premises. Just make sure it’s permissible under your lease agreement with the landlord. This approach is a practical way to optimize your real estate investment until your business grows into the space.
2. Rent Out Idle Equipment
Another way to maximize your assets is by renting them out when they are not in use. For example, a transport business can rent out tractors or trailers on days they are not needed for operations. This is particularly effective during peak demand times for other businesses, such as supermarkets. Renting out idle equipment can provide a valuable additional income stream without requiring further investment.
3. Extend Working Hours
If your business is approaching the maximum capacity of its assets during regular working hours, consider extending your operational hours. For instance, if you’re in manufacturing and only operate from 9 to 5, you’re underutilizing your machinery. Extending work hours by even an hour can significantly increase output and profitability without the need for additional machinery.
4. Schedule Maintenance Outside Working Hours
Many businesses hesitate to schedule maintenance outside normal hours due to additional costs. However, taking a machine out of use during peak operational times can be far more costly in terms of lost productivity. Weigh the costs of paying a premium for after-hours maintenance against the potential revenue loss from downtime during regular hours. Keeping your assets operational during peak times is crucial for maximizing their usage.
5. Streamline Your Product Offerings
While it might seem counterintuitive, reducing the range of products or services you offer can help maximize asset utilization. For example, a window cleaning business may have expensive equipment for cleaning patios and gutters that generate higher profits than window cleaning, yet spends 75% of its time on less profitable window cleaning. By focusing on high-ticket services and reducing lower-ticket offerings, the business can better utilize its expensive assets and increase overall profitability.
6. Expand Your Product Range
On the flip side, diversifying your product range can also help maximize asset usage. If you’re a manufacturer, you might be able to produce different products by simply changing the tooling on your machinery. This allows you to meet varying demands without significant new investments. Similarly, in the hospitality industry, many restaurants and cafes increase profitability by expanding their operating hours to offer different services, such as breakfast or evening meals, utilizing their kitchen and premises more efficiently.
Conclusion
Maximizing asset utilization is crucial for small business profitability. By subletting unused space, renting out idle equipment, extending operational hours, scheduling maintenance strategically, streamlining product offerings, and expanding product ranges, you can ensure that your assets are working as hard as possible. These strategies will help you get the most out of your investments and drive your business towards greater profitability.
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