It’s critical that CEOs and business owners have an understanding of how to increase their business profits in the ever-evolving business landscape, especially if they want to see success and their business to thrive in 2025. Along with the perks of a fresh start, there are many challenges businesses face as the new year approaches including rising costs and a lot of economic uncertainty.

At The Finance People, we offer a free 30-minute consultation to help you assess your profitability, helping you implement the right strategies that set your business on a path for growth, and not only maintain but enhance your profitability.

In this blog, we’ll cover effective strategies to increase profitability for your business, and how a Fractional CFO can identify what steps you can take now to make sure you’re set up for financial success in 2025.

*Image by* *Austin Distel from Unsplash*

Why Profitability Matters in 2025

Profitability and financial performance is the cornerstone of any successful business. It lays the foundations and supports your operations and provides the necessary resources for innovation and growth.

As economic conditions continue to fluctuate well into 2025, maintaining a strong profit margin will make or break your business - those that prioritise profitability will put themselves in a better position to invest in new opportunities, stand strong through recession and attract new valuable employees.

The Common Reasons for Declining Profits

The first step you must take is to understand why many businesses face challenges that cause a downturn in their profits.

By identifying the common finance mistakes business owners make, you can take proactive steps to avoid these:

Rising Operational Costs

Costs that keep increasing can chip away at your profit margins if they’re not managed efficiently.

Inefficient Processes

Operational processes that are outdated and inefficient can cause a massive waste of resources and lead to lost revenue.

Poor Customer Engagement

Failure to connect and engage with your customers can lead to missing a lot of opportunities for upselling and cross-selling.

Economic Uncertainty

Unpredictable revenue streams can be created by the constantly fluctuating market conditions.

6 Steps to Increasing the Profitability of Your Business

Step 1: Assess Your Current Financial Performance

The first step you need to take towards increasing your profitability, is to conduct a thorough assessment of your business’s current financial performance. This will provide your business with a solid foundation for your profitability strategies.

The key metrics you should focus on are:

Profit Margins

Having an understanding of your profit margins will help you to highlight areas where you can effectively reduce costs.

Operational Costs

Conducting a detailed review of your processes and operational expenses can reveal inefficiencies that need to be addressed.

Revenue Streams

Evaluate which of the products or services on offer generate the most revenue, and which of them may actually be costing the businesses more.

You can get started by using our 2025 Financial Health Checklist to gain insight on the current state of your business’s finances.

Step 2: Implement Cost Reduction Strategies

Reducing your business’s costs is an important element of boosting your profitability and recovering from financial turbulence. You can improve your business’s profit margins by having a focus on cost reduction, without sacrificing on quality.

Key strategies to focus on include:

Streamlining Operations

Reduce lost revenue and improve efficiency by identifying outdated or inefficient processes that can be improved upon.

Supplier Negotiation

Review your supplier contracts regularly to highlight where you may be able to negotiate better terms and lower your business costs.

Step 3: Maximise Your Revenue from Existing Customers

One of your most valuable assets is your existing customer base, and nurturing this is an effective way for you to significantly boost your business’s revenue.

There are many great strategies you can utilise to maximise your revenue:

Upselling and Cross-Selling

You can encourage your customers to purchase additional products and services that complement the products they’re already using.

Enhance Customer Loyalty

Put loyalty programs in place or develop personalised marketing strategies to strengthen customer retention.

Step 4: Diversify Your Revenue Streams

Only having a single revenue stream for your business can be risky, which is why it’s important to diversify your offerings and help reduce this risk while increasing your profitability. Not only does this decrease risk, but can open up new avenues for profitability.

Key points to consider:

New Product Lines

Introduce products that complement what you already have on offer, or new services that align with your brand.

Collaborations and Partnerships

Explore collaborations and form partnerships with other businesses to reach new potential customers and enter new markets.

Step 5: Leverage Technology and Automation

In the digital age that we’re in today, understanding how you can use technology strategically is essential to improving your business’s efficiency and profitability. Making an investment in these tools can lead to significant improvements for your business.

Key points to consider:

Automation Tools

Implementing tools that can automate your business’s repetitive tasks will free up time for innovation, product and service development and strategic planning - you can read more about the pros and cons of using AI in Finance here.

Data Analytics

Utilise analytics tools available to gain insights from data about your customers’ behaviour and market trends. This discovery can give you the foundations for making informed decisions that will result in an increase in your business’s profit margins.

Step 6: Monitor and Adjust Your Financial Strategies

Today’s business landscape is constantly changing. Regularly reviewing and adjusting your financial strategies are essential, along with consistent monitoring to ensure that they remain effective and up to date.

Reviews to put in place:

Financial Reviews

Regular financial assessments should be conducted to track your business’s financial performance against your goals.

Adapting Strategies

You should ensure that you’re prepared to change and adapt your strategies at a moment's notice, depending on market conditions and business growth.

How Could a Fractional CFO Help?

Recruiting a Fractional CFO can provide your business with the expert financial guidance needed to navigate complex profitability challenges.

A Fractional CFO can:

Develop financial strategies that align with your business goals.
Teach you how to gain insights into financial forecasting and budgeting.
Offer ongoing support in monitoring and adjusting your financial performance.
Provide the necessary tools for business growth.

At The Finance People, we understand the unique challenges faced by SMEs and are committed to helping you achieve your profitability goals.

Book your free 30 minute consultation and take the next steps to increase your business’s profitability, with assessments and strategies from experts that are tailored to unlock your business’s potential.

How to Increase Profit: Business Strategies for 2025