Maintaining a healthy profit in business can be difficult, as there are so many competing factors. Costs are increasing every year, with wages, insurances, administrative functions and wholesale goods and services rising continually. As a business owner, how do you keep afloat? With a little effort and forward planning, there are many ways you can increase profits and make sure you business is a success long into the future.
1. Take stock of where you are sitting right now
The very first step to increasing profits is to scrutinise where your business is sitting financially right now. What are your costs? What are your gross profits on each of the goods and services you offer? What outstanding expenses do you have to pay, and what is still owed to you? It is also wise to project forward for 6-12 months and think about upcoming expenses and payments. Once you have a clear picture of where your bank account stands, you can set some realistic profit goals and take steps to achieve them.
2. Review prices
How long since you reviewed your prices? Do some research on what competitors in your field are charging and use this as a guide, however you don’t have to price-match exactly as every business is unique. Look for ways to value-add for customers, such as exceptional service, informative advice or a personally-written message to accompany online orders. Discounts are a great way to attract customers, but save them for special occasions as they can really damage profit margins if left to run for too long or too frequently.
3. Lower running costs
Increasing profit is not all about earning more on each sale, but spending less as well. Find a figure on your administrative costs and see where you may be able to shave a little off. Are there tasks you are outsourcing that you could do yourself? Can you find cheaper stationary, packaging or IT software that will give you satisfactory results for less cash? If you rent a space, is it time to look at a move?
4. Get your staff on your side
If you have business partners or staff, building and maintaining a positive working environment and rapport is vital to success in a business. Make sure everyone is equipped with the adequate knowledge and motivation turn every meeting – social or business – into an opportunity to promote your goods or services. The more positive conversations your and your team have with the people around you, the more sales and profits you will start to see.
5. Customer retention
It is far cheaper to keep existing customers that find new ones, which means more profit to keep in your bank account over time. Think carefully about your customer management systems and where you can implement new strategies to encourage past customers and clients to return. This could be via an incentive, launch of a new product or a competition draw. You will still need to pour some time and money into attracting new customers, but think about how hard you have to work for each one.
6. Lead generation and conversion to sales
Past, present or future customers – it doesn’t matter. This point is all about maximising your leads to maximize potential for sales. The math is simple – the more people you have visit your business (in person or via website), the higher the probability for sales and thus profits. For
example, if you usually have 10 visits to your website in one day and you increase this to 15, you are potentially boosting your profits by 50 per cent. Promote your business any way you can and look for creative ways to get your message out loud and clear.
7. Increase size of transaction
Once you are getting more people over the line, another way to increase profits is to boost the amount they are spending. This can be by offering accessory or complementary products, free shipping if a certain amount is spent, or up-selling your most popular products or services to a more expensive, superior variety in stock.
8. Up-to-date inventory
Keeping a strict, effective inventory will help you prevent overcapitalising and wasting any profits on stock that simply sits around. Knowing exact levels of stock means you can plan ahead and only re-order as needed, or look to upgrade an existing item that has lost interest with customers.
9. Utilise technology
There is no doubt about it – any modern business that intends to make a profit must be at the top of their game when it comes to social media. These platforms, such as Facebook, Instagram, YouTube and Twitter are where many people now shop both directly and indirectly. Stay connected to your customers through targeted social media strategies to showcase your brand and stay front-of-mind for people looking for your type of product or service. You can also use technology in other creative ways to lower costs and drive profits. Webinars, for example, are great ways for service-oriented businesses to be seen and known by prospective customers. Tutorials and demonstrations are great methods of value-adding to your business, promoting products and attracting sales. Make sure you measure any online marketing efforts so you can tweak your approach over time and ensure you are hitting targets.
10. Work with other businesses for mutual benefit
Another effective way to increase profits is by teaming up with like-minded or complementary businesses. For example, a women’s clothing company could join forces with a makeup brand, or a property management company could work with a financial planner, building company or architect. It is important to not only choose a type of brand that fits with yours, but the right people to go with it. When done the right way, co-marketing and cross-promotion works extremely well in driving interest, sales and ultimately profit as it effectively doubles your audience. Affiliate marketing or enlisting influencers are other ways to work with other businesses or professionals to work your sales funnel from social media.
Kym Wallis, the founding director of Higher Ranking has over 15 years of advertising sales, digital strategy, and business development experience. He is currently working as Digital Adviser for Konnect Salon Software