When it comes to increasing your profits, there is no magic formula. In fact, it is just basic maths whereby you need to earn more and spend less. While it is easier said than done, here are some hints and tip about how to increase your business profitability and steps you can take to get there.
1. Review your spending
If you haven’t already, create a list of all your outgoings and then deduct this total cost from what you take each month. If you are not happy with the amount, then you need to revise your spending and look where you could cut back.
Some areas that might be worth looking at are:
Office supplies and telecoms
- Can you go paperless?
- Do you have the right broadband at the best price?
- Can you outsource your IT support and back up files using cloud-based technology?
- Can you negotiate lower costs with your suppliers?
- Are you turning off equipment when it’s not in use?
- Are you making full use of free social media platforms such as LinkedIn and Facebook?
- Could you use company vehicles to advertise products and services?
- Do you know the ROI of each paid-for marketing campaign or advert?
- Do you print more flyers/leaflets than you need each quarter?
- Could you move to email campaigns if you haven’t already to save on printing and postage?
- Could you outsource your marketing/IT/administration to a freelancer?
- Are you recognising employees’ hard work which in turn could reduce the number of sick days taken?
- Could staff work remotely or part time?
- Could you introduce performance-related pay?
- Are staff incentivised to help your business achieve its goals?
- Is your office/premises larger than you need it to be?
- Could you relocate to a serviced office?
- Could staff work from home on a rota meaning you can downsize your office space?
- Could you renegotiate your rates?
2. Increase the number of customers
How many of your leads do you convert into clients? Increasing the number of customers you have will certainly help increase profits. It is also the one thing business owners spend the most time thinking about. To help you could:
- Review your offers, exploring the possibility of digital products
- Automate your marketing
- Use social media advertising
- Ensure your website is up to date
- Use software to track the customer journey on your website
- Converse in real time with potential customers to answer their questions and help them buy from you
- Make it easy for them to buy online
3. Increase the amount customers buy from you
Having repeat customers is vital, not only because they are likely to keep buying from you, but if they are confident in your service or product, it is likely they will recommend you to others. Therefore, having an efficient CRM system will help you stay in touch with these customers and help them buy from you again and again.
Review what it is your best customers are buying and see if there is scope for you to up-sell, cross-sell or diversify your offerings to compliment those sales.
4. Charge more or offer different packages
It’s a good idea to review your prices regularly based on changes in the marketplace. However, most business owners find it very difficult to increase the price of a product or service because they don’t want to lose customers. Yet, if your product or service is good, it is likely established customers will stay with you because they trust your brand. However, it is always a good idea to test a price increase before you make it permanent, just in case.
If charging more is not an option, then look to offer different packages with varying levels of service or content. That way, it is up for the customer to decide what it is they want while offering scope for you to up-sell later on in your business relationship.