Numbers don’t lie. Quarterly reports by several companies are showing trends that validate a concern shared by many merchants – increased profit is becoming more and more elusive. And that pursuit just got a bit more difficult.
If you have a retirement account, you’ve seen how things have been going well in the ‘right’ direction since the beginning of 2019. It seems the cuts in earnings at the end of 2018 were a bit too steep in anticipation of some financing melting and that has paid off in Q1.
But the melting hasn’t happened and that has lead analysts to one conclusion – costs are increasing.
Costs On The Rise
As a business owner, are your costs going up? Have you noticed your revenues are up as well? Business is great, as long as one outpaces the other, right? Wrong. On average, earnings are down, despite an average increase in revenues. So, selling more doesn’t necessarily mean more profit. Which lever can you pull to directly impact your profit?
Consider employing a cash discount program to offset your processing costs!
Analysts expect the S&P 500 will report year over year growth in revenues, while seeing a decline in earnings.
- Q1 Earnings: Down 1.8%
- Q1 Revenues: Up 4.9%
A group called FactSet surveyed 23 companies about their revenues and earnings in Q1 and found the following:
- Unfavorable foreign exchange 57%
- Higher wage and labor costs 43%
- Higher raw material costs 39%
- Higher transport costs 22%
- Weather 39%
- Europe 26%
- Tariff/Trade 26%
Wages Among Others
Certainly, tariffs and duties have contributed to the pain. But there are many large chains (AutoZone, Costco, FedEx, Lennar) that are pointing the finger at wages and labor being the main contributors to higher costs. It’s great for the employees, but the businesses are feeling a bit like Atlas trying to carry all of that overhead on their backs.
What about the local services, restaurants, retailers? What about you? Are you feeling the same pains?
If you spend any time at all during the day wondering how to increase your profits, then you should be considering a change to your payment processing as a quick and seamless option. If your current processor doesn’t offer a cash discount program, consider one of our best processors.
Increase Profits Immediately
Merchants who offer a cash discount program save between 3.5% and 4% each month that is pure profit. That profit is being used to hire personnel, purchase equipment, or increase marketing efforts.
If you haven’t heard of cash discount, or if you want to know more, feel free to look around our site. Then, talk to a competent processor and ask if they offer a program.
Increased wages are good for those receiving the wages but have unintended consequences in the form of less profit in an economy like ours today. When that happens, business owners need to be open-minded and creative in finding new ways to increase profits. Should analysts be correct, consider offering a cash discount among the other adjustments you’ll be making to stay ahead of your increasing costs.
Read the full review here.