How to reduce overheads to improve EBIT? Well you need to book your time into your calendar to focus on your COSTs. Irrespective of what Gross Margin you make, you won’t be able to pay bonuses and invest in growth without making a net margin.
Your earnings before interest or tax (EBIT) shows your business’ earning ability.
It also reflects how efficiently you manage your finances.
A high EBIT means your business is profitable while a low one means the opposite.
Increasing your sales and reducing your overhead costs greatly impact your EBIT.
Hire a CFO
We mentioned in the Growing Leaders key the importance of hiring a CFO or part-time CFO.
At first glance, it might look like an addition to your overhead cost.
Contrary to that, bringing in a CFO can greatly improve your EBIT and your profit.
He can also help you avoid costly financial mistakes.
You can further read about the importance of hiring a finance officer in the Growing Leaders key.
You need to find the right balance between employees and contractors.
More so, your in-house team doesn’t have to do everything.
Outsourcing some tasks and responsibilities help you save on the cost of overhead expenses.
You don’t have to pay full-time wages as well.
Most of all, you can easily stop using third-party services when there’s a need to scale back.
A word of caution, though — make sure that you get contractors from a reputable source.
For more information about outsourcing, check our article on this topic in the Growing A Team key.