HOW TO GET YOUR COMPANY EBIT TO 20%?

The success of a business could not be measured by how well it looks on its outer appearance. Some businesses may look profitable as they reside in tower buildings or have multiple ads but get negative in revenue. While others are small yet expect a huge annual revenue. ?

If you’re a business owner or an entrepreneur, you sure have envisioned a business roadmap with a straight path to success. Indeed, your customers take a huge piece of your business’s growth. But remember that they aren’t the only factor in your circle. Because at the end of the day, your company’s profitability is an indicator of your business status. ?

Your business needs to make an ideal profit as it enables you to secure the finances and funds for your projects. The more profitable your business becomes, the more investors you can attract and help your business flourish. To ensure your profit, let this article teach you how to get your company EBIT to 20% and what could business strategy consultant like Loading Growth ?

What is EBIT? ?

It would be weird if we taught you how to get your company EBIT to 20% if you aren’t aware of its potential and definition. So, allow us to help you understand its purpose and origin using these facts below. ?

• EBIT stands for Earnings Before Interest and Taxes ?
• It is known in many terms like operating profit, net operating income, operating income, and net operating profit. ?
• The American billionaire investor, John Malone invented this with the purpose of minimizing the reports in taxes and earnings to ensure the internal growth of the company and acquire pretax cash flow. ?
• Earnings before interest and taxes or EBIT is a powerful tool of measurement for your company’s potential to make a profit from operations. ?
• It is essential to perform in businesses as it helps in projecting the amount of profit you make from your core operations. ?
• Unlike the misconception of others, it is not focused on individual tax obligations or the capital structure of a business. ?
• To get the accurate percentage of your earnings before interest and taxes, you must convert the absolute money you earned into a ratio. Then multiply whatever result comes up with 100 to get the proper percentage. ?
• Your EBIT is the key to securing your future loans or acquiring investment for your company. ?

Now that you’ve learned what EBIT is, let’s talk about how to get your company's EBIT to 20%. ?

Expense Management ?

Your first step on how to get your company EBIT to 20% is expense management. Your common expenses are supplies, payroll, the electric bill, water bill, maintenance, taxes, and your monthly pay for rent. If you can save from any of these, you can expect higher earnings before interest and taxes. Here are some ways that would help reduce your expenses. ?

• Check your operations and see the number of your employees. ?
• Reduce the excess of employees but introduce incentives to the remaining to keep them motivated. ?
• Browse your other expenses to see what’s unnecessary and cut them down. ?
• If you’re paying for rent, look for another place that offers a lower price but offers the same comfort. ?
• Shut down unnecessary equipment or appliances. ?
• Call for a repairman to solve your problem with leaking pipes that causes a rocket in your water bill. ?
• For the raw materials, try to use local brands that offer the same quality for a lower cost. ?
• Reduce your expenses on supplies ?
• Compare prices but do not forsake the quality ?

Invest in Proper Technology?

Another way to get your company's EBIT to 20% is the investment in proper technology. Did you know that the cost of your production would be cheaper if you adopted automation? There is plenty of proper technology that you can use to achieve this. As you know, our body has limits. Your employees could get sick, tired, or demotivated, which therefore affects their performance at work and production. Here are some questions that would help you find the right technology to incorporate into your business. ?

1. Is it easy to use? ?
2. Could it be integrated with other tools? ?
3. Would it give you a cost-benefit? ?
4. Do your competitors use it? ?
5. Would it make you broke if you bought it? ?
6. Do you think that it can fill your business’s needs? ?
7. Will it shorten the production time? ?
8. Is there a chance of ruining your product in any way? ?
9. Do you really need it? ?

?Go for Discounts ?

One way how to get your company EBIT to 20% is to go for discounts. If your product relies on resource materials purchased in bulk. This way the materials will lower in price enabling you to get a discount and save. You can also negotiate with your suppliers or look for a new partner that offers a lower cost. You can also turn to large retailers to get better deals. But hold on! Here’s what you need to look out for to avoid uncomfortable circumstances. ?

• Make sure it’s legal and high-grade ?
• Beware of hidden taxes ?
• Check if you’ll get even with the shipping expenses ?
• If it’s consumable, check for the expiration, ask for a warranty if they are gadgets, and quality if they are raw materials?

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Consider Price Increase ?

Have you thought that maybe it’s time for you to update your price? This is one way to get your company's EBIT to 20%. But before you do that, make sure that your customers see it as reasonable. It could be a change in formula, an increase in service, or other reasonable cause for your increase. This way, they’ll continue to engage in your business. ?

Conclusion ?

Every business owner dreams of having a profitable income. We try different things and strategies to make it work. Some of us even seek help from a business strategy consultant like Loading Growth which does help especially in complex business decisions. Now that you’ve learned how to get your company EBIT to 20%, expect the good changes coming your way! ?

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If you would like to scale your IT Service firms to the next level, book a call with me. https://www.loadinggrowth.com/15minutesessionwithian?

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