Often success is measured by increasing profitability of a business, if the profitability isn’t increasing, it can make a business feel stagnant. You don’t have to make dramatic, big changes or cuts such as increasing prices or laying off staff. There are other ways in which you can make small changes that will benefit your business and increase your profits. Being a small business owner, if your year-on-year profits aren’t increasing, or even worse are decreasing, then you will seriously need to look at different strategies to increase your profits.
Increasing profitability of your business is likely going to be a slow process, you can’t make one change and expect miracles. However, by making small manageable changes to your costs, you will start to see the profit margin increase. Here are some ways you can increase the profits of your business.
Cut costs
The most obvious way to increase profits is by cutting costs, but you have to make sure that you don’t compromise with the quality of your products or services. There are many different ways in which you can cut costs and increase your profits and some of these are:
- Do your own marketing. If you are an established business, then you will know what marketing schemes work best for you. Don’t waste time on marketing that doesn’t get any leads.
- Hire staff part time instead of full time.
- Go green and save on your electric bills. This can include turning off computers when not in use, to going paperless.
- Have a budget and stick to it to save money. It will also show you where you can actually cut costs.
Increase prices
Businesses may be hesitant to increase prices because they risk the wrath of customers. However, if you increase the prices of your product or service within the 5-10% range, you won’t face any market resistance. If you provide a quality product or service, with great customer service, your customer’s won’t mind you increasing prices slightly. Make sure that increasing prices isn’t a regular occurrence, or that you don’t increase prices higher than 10%.
Sell more
This may seem obvious and you may feel like you are selling as much as you can, but remember that you can always sell more and do better. There are a range of different techniques you can use to sell more. For example, you can offer an annual plan for membership at your gym, for a cheaper price than a pay as you go method. This will give the customer an incentive to join the long term membership. It will also mean that you have income coming in for twelve months. Try using these different methods to sell more to your customers:
- Cross selling – offer your customers complimentary products to the ones they are purchasing.
- Up-selling – selling the premium version of the product that your customer is buying.
Expand
Business growth and expansion should always be a prominent thought in a business owner’s mind, as expanding your business should be something that can help the profits. You can expand by developing new products and services. This will obviously require spending money first, but it will be an investment in the future profits of your business.
Additionally, make sure that you are keeping an eye on the competitors. You can find good ideas for new products by looking at what your competitors are selling and what they are doing great at. Make sure you don’t duplicate, rather add to an existing idea if you want your product to be a success.
Boost productivity
To make more money, ensure that you are doing everything to boost the productivity in your workplace. If your employees work harder, especially if you work in sales, then you can see instant results. You can motivate staff and improve productivity by offering incentives to your staff. For example, you may offer them extra time off or early finishes if they achieve certain amount of sales.
Keep staff informed
Saving money and improving your profitability needs to be a team effort. You need to keep your staff informed and make it a collective effort. Your staff need to be involved and they may even be able to offer further ideas to improve profits.
Regular reviews
You should take time to do regular reviews of your finances. You need to make sure that you keep an eye on your budget and revisit it periodically as it can help you see where you can cut costs. Make sure that you are looking over your sales figures regularly, as it will help you see the bigger picture better.
There are many ways in which you can increase profitability. And although the easiest option may be to just raise the prices, be cautious as you could face repercussions from customers.
More on growing your business.
Follow Company Bug