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Why The 1% Is Important - FREE Money.

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Silver Contributor
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Speedway Pass
Dec 14, 2015
South, UK
As it's the end of the year I ran some reports and had a staff meeting before closing up.

This is completely simple, it's not rocket science and it is stating the absolute obvious.

However it's also very easy to forget.

We've been so focused on growing the turnover, and whilst we are being pretty strict on maintaining profit margins it's still very easy to forget the 1%...

By the 1% I mean this.

If you turn over £1,000,000 and you have a GP of 30% then you're making £300,000 per year before costs.

That's £10,000 per 1%.

Turn over £500,000 that's still £5,000 per 1%.

So if you can:

  • buy a regular selling line in bulk and save 10% on that product line
  • reduce the amount of discounts you give by a percent or two, swap bigger discounts for free products that offer a greater intrinsic value to the customer, but cost you less off your bottom line.
  • Reducing manufacturing costs

Then you might just make an extra couple of percent at the end of the year for the same turnover, for doing nothing more than spending wisely.

Anyone want $15,000 for doing nothing?

That's how much I could have had in my pocket right now, if I bought one particular best selling product line in 50's rather than in 5's. Overall would have spent the same amount throughout the year.

If I'd have stocked another product line instead of dropshipping then I'd have gained an extra 1% on that line simply by reducing shipping costs.

I feel a bit stupid for missing this basic business principle - "reduce costs, make more money - no s&&t" but it's easily forgotten when you're chasing more sales.
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