One should make a list of strengths and weaknesses of the company by examining every aspect of its activities, including sales and procurement, cost management, personnel and financial control. Using financial records, evaluation under these various aspects by elements should be made. The list should be as detailed and exhaustive as possible, since based on this list the program of actions will be created on which, in turn, will be built the business
Past and current turnover, divided by product, by sales volume and sales prices are among those elements. Analysis of costs is carried by the type and breakdown of direct purchases, operating expenses and ongoing overhead expenses such as costs for rent.
Another important element is the assets and liabilities of the company. One should make a list of major long-term assets and their relevance and importance to the company. Working capital is - the difference between current assets, such as: cash, bank accounts, inventories and accounts receivable - and current liabilities, such as: accounts payable, borrowings
After analyzing the operational and financial aspects, and by listing the strengths and weaknesses, one is able to begin learning how on the basis of past financial indicators derived from accounting records can be formed future financial plan.
Company’s management should examine turnover, defined as sales of existing products and related products, as well as potential new products; examine the sales prices and the relationship with key customers and how you can attract new customers. Based on the analysis, create a plan to increase sales, preferably directed to those products and product groups, which will give the highest gross profit
Important role is played by sales channels. While the company may already have multiple sales channels in the past, perhaps this potential was not fully utilized. One should explore the strengths and weaknesses of each existing and other potential sales channels.
Other areas that require attention include: selling prices, maybe there is an opportunity to raise some prices. Studying of existing customers can point out where and how you can increase sales.
Another important element is costs management. Examine the database of suppliers and the possibility to find cheaper and better suppliers. Most small and big companies always have the opportunity to reduce the costs associated with the purchase.
It is required to consider and financially assess the actions of management, prepare financial projections of the budget business plan, supported by the description of the measures to be taken to improve profitability, regularly check progress and its influence on the rate of return. With the passage of time and with the emergence of new opportunities may become necessary to adjust or revise the current actions or program of actions (http://business.damotvet.ru/small-business/1012838.htm).
Conclusion
Resources of income for enterprises are: net income from selling of products (providing services), profit from financial and ordinary economic activities, extraordinary profit.
The rights and opportunities of allocation and using the income are very important for any enterprise because income is the main source of financial, production and social development, financial development of its employees. The order for income allocation and utilization for commercial enterprise are defined by the methodology of income that is accepted in particular society at this stage of its development. Current order of income allocation corresponds to current stage of market relations development. The income should be allocated between owners, investors of the enterprise and government (as taxes). Common to all businesses regardless of ownership and types of activity is the distribution of profits in accordance with the statute and the collective agreement for the following purposes: payments to the budget, contributions to the non-budgetary funds, the formation of the accumulation fund, establishment of a fund of consumption, charitable purposes, other purposes (saving for the purchase of property, etc.).
There are several types of costs: explicit costs, implicit costs, fixed, variable and semi-variable costs.
One of the ways to decrease the costs is reducing the costs of production by the use of scientific and technological progress;
improving the organization of production on the basis of productivity increase through reduction of working time wastes; state regulation of economic processes. Another way is creation of the system of effective control over costs, which is consisted of cost accounting, staff’s support of cost accounting system, analysis of the causes of costs in the company. There are also some tips to reduce costs like categorization of expenses by clearly defined categories, focusing on the most significant costs, planning and implementation of cost reduction. Besides ways and tips for reducing the costs one can use special approaches to do it: 1. Know the measure, 2. New or old partners, 3. Horizontal integration, 4. Vertical integration, 5. To buy or produce, 6. Rent or own, 7. Forms of payment, 8. Tighter control, 9. Optimization of technological processes.
To increase the income one can use the general rule of profit maximization: The firm will increase output until the moment when additional costs of producing an additional unit of output equals the marginal revenue from its sale. This is called the rule MC = MR.
More general ways are focusing on the factors affecting the profitability of the company; evaluation of financial statements; the financial records must be updated; making a list of strengths and weaknesses of the company by examining every aspect of its activities and a list of major long-term assets and their relevance and importance to the company; company’s management should examine turnover and sales channels.
List of used literature
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3. Business Ideas. Typical Contract. (no date). Расходы предприятия. Классификация расходов. RetrievedOctober 11, 2009, fromhttp://www.tvoydohod.ru/fin_11.php
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5. Vuzlib, the legal and economical library. (nodate). Стратегия по снижению расходов. RetrievedOctober 16, 2009, from
http://vuzlib.net/beta3/html/1/5575/5639/
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7. Zubolom.ru. (no date). Минимизацияиздержек. Основные пути снижения расходов. RetrievedOctober 15, 2009, fromhttp://zubolom.ru/lectures/economy/28.shtml