Small Businesses

Business Profitability – 10 ways to boost

10 ways to increase your profitability

Many business owners put in a lot of work to make their business profitable. Every one of us should be rewarded for our efforts, financial or otherwise. It is important to consider whether you are using your resources in the right way to reap the rewards you want.

From the many businesses I have seen and worked in, there is a lot of opportunity to misspend effort. That is, to work hard but on the wrong thing. Here are ten areas where your return can be really increased.

Marketing inconsistency

Once you are committed to running your business, you need to be equally dedicated to selling and marketing the products and services. Without ongoing, concerted marketing, it can be difficult to stay profitable.

You can get more from your marketing by creating a simple plan that includes all marketing activities every day, every week, and every month. Marketing plans include both formal activities, such as writing, promotion and advertising, as well as informal activities (such establishing new contacts). Do not underestimate the power of sharing your ideas with others. Make sure you take advantage of every opportunity.

Fear of asking for the sale

Do we really think that asking someone directly for their business is a sign of being pushy? This attitude can lead to us allowing profit-producing opportunities to pass us by. It is a common mistake to worry more about how others view you than it is about bringing in more money. You can be certain that you are not making as much money if it is difficult for you to “ask” for the sale.

This is the best way to deal with this problem. Practice asking for sales in a language you’re comfortable with. Write down what you want, and then practice it repeatedly. There is a lot of information available about handling objections. Be prepared with the most common objections in advance so that you can speak with your customers.

Help is available

While most business owners have strengths in one or two areas, many end up in areas that they don’t excel in. This leads to inefficiencies and the potential for making mistakes. This makes it worse. We don’t ask for help immediately, but we struggle to do the things we aren’t able to (save money, right?). Every day your business is running at a lower efficiency level, you are losing dollars.

Work out which areas of your business add the most and where you have the least value. You can hire someone to assist you with low value activities. It is the best place to spend your time. Your business will reap the benefits of more of this type of activity.

Make use of your existing customer base

Research shows that it is cheaper and easier to continue working with customers you already know than to attract new customers to your business. You are decreasing your profitability potential if you don’t follow up with customers who have left.

You can develop strategies to keep customers coming back to you. These strategies include loyalty programs, regular communication, and special offers. Follow up with your customers regularly after they have purchased from you.

How to manage expenses

Smart business owners are always aware of their expenses and look for ways to reduce them without compromising quality. A cost analysis is a great way to reduce costs and increase profitability.

Every quarter, you should examine your spending and negotiate any adjustments. You should categorize everything that you spend in three categories: Essential, Nice To Have and Non-Essential. You can have everything in the first two categories, so be thorough!

Spending large amounts of money on high-end marketing materials and expecting business flow in with minimal effort.

Glossy marketing materials and glossy brochures are nice complements to more active forms such as calling people, meeting people, and speaking to them. Brochures and business cards are not the same as direct contact, however beautiful they may be. You will lose your profitability if you invest in marketing materials. Your business is best promoted by others.

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Marketing materials are an investment. You need to know how much you are getting back. You should at the minimum track where new business comes from to get an idea of how your marketing materials contribute to that business.

It is a waste of time to engage in low-return activity.

This one is obvious to everyone. It is not the best way to use your time. If you spend most of the day doing tasks that are repetitive and/or administrative, you are not using your full potential. The best activity that can add value to our lives is bringing new customers into the business by building relationships, talking to potential customers and promoting the business.

How valuable is your time? For each market or industry that you work in, determine a fair hourly rate. It might be between $100 and $150 per hour. Next, ask yourself if you would be willing to pay someone that much an hour for administrative tasks or processing accounts. If your answer is no, you can find a way to do these low-return jobs for a lower hourly fee. Spend a few hours per week with a bookkeeper, or an assistant, and you can still do the valuable work.

Don’t charge too much to do what you do.

This is a problem that seems to be especially relevant for service-selling professionals. We either feel embarrassed asking for more money or accept less than we need to get the money we want. However, working for less can cause you to feel frustrated and depressed, which can have a negative impact on your profitability.

It is not necessary to defend an increase of your fees. It’s a common business strategy to review fees structures, change them and advise customers. Contrary to our fears, many times business levels increase after fees are raised. When our fees reflect the value that we offer, it seems like we attract a different kind of customer.

Inadequate use of technology that could help save time and money.

Your business owner has a set amount of energy and time that you have to maximize your profits. Voicemail, autoresponders, voicemails, wireless internet connections and speech recognition software can all help you achieve this goal. All these tools are easily accessible and can help you save time and effort. We all need to continue to look for ways to improve business processes through the use of inexpensive technology.

Of course, we don’t always know what we don’t know. We might have access to a wonderful tool, but we don’t know about it. Keep up-to-date with new products by checking out business and telecommunications websites regularly.

Staying with old business models and plans.

We’ve all heard this before: Doing things the same way as always means you will get the same results. You need to take a look at how and what you’re doing things in order to improve your results. A skilled entrepreneur is a person who challenges the way things are done in their business.

Attending seminars or conferences on different topics is another great way to discover new ideas. A seminar is worth it if you take away one idea that you can put into action in your business.

If you want to improve your business’ profits (and aren’t we all?), then take action.These areas will allow you to make more money and have fun with your business. That’s really all it is.

molw.net

We are a team of professionals with each having two decades of experience in start-ups, sales, marketing, finance, HR, large scale project and profit centre management and running mature cross functional operations. At Molw.net we are big believers that knowledge transfer is critical to our industry’s evolution. We love to share our experiences and learnings through our online resources.

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