When you are just starting up and new in the race, you focus extensively on adding more customer base and increasing sales. However, even the wisest of the wise tend to lose sight of the actual profit margins. Increased sales are of no use if they do not correspond to profits and end up leading to excessive cash burn.
Take a look at these simple yet effective ways of boosting your profits and improving your bottom line:
IMPROVE YOUR BUSINESS PROCESSES FOR BETTER EFFICIENCY, HENCE REDUCED COSTS:
Whatever your size of the business, inefficient systems can lead to increased costs. Study how the processes function now (current state) and find ways to optimize without compromising on quality. Ponder on how you can make the process shorter and quicker. If you don’t know or are unable to get an answer, talk to experts. Detail out the key actions you must take to get to the ideal (optimized) state and work toward this to improve profitability.
IDENTIFY WITH YOUR CUSTOMERS AND DELIVER JUST RIGHT:
Customer expectations are fast evolving and could lead you clueless. As a small business do not shun away from understanding your customer needs, thinking market research is a waste of money. Invest in understanding who your customers are, what they need and their motivations of engaging with you. Understand the right offering mix per their needs, and offer just the right solution. Offering products just as per their needs can help you price better and hence increase profits.
RENT INSTEAD OF OWN:
Piecemeal offerings allow you to optimize your costs. Whether it is a software or physical working space, look at ways of containing your costs by consuming only what you need. The market today offers many choices even when you choose to rent instead of own. Cutting the flab can help you save, and hence increase profits.
LOOK AT OUTSOURCING WORK INSTEAD OF HIRING FULL-TIME EMPLOYEES:
Full-time employees can be expensive, and come with quite a few obligations for the firm. In addition to paying then salary, you need to offer insurance, plan for taxes, other perks and more. When you are a small business you may not need many key services all day long, all round the year. Hiring an expert as a full-time employee, and not utilizing them all the time is not only expensive for your firm but also frustrating for the employee. Consider outsourcing the work to experts across streams like finance, legal, HR, and more. When you outsource you save on costs, pay for services only when you use them and work with the best staff in the industry- without the key obligations that come with full-time employees.
FOCUS ON A POSITIVE ONLINE PRESENCE AND CUSTOMER REVIEWS:
Customers are increasingly looking up the web for information, reviews, and suggestion, hence there is no denying that your online reputation is crucial to your existence. A good reputation online adds to your credibility, especially when your customer speaks as your custodians. Today many platforms offer a great opportunity to engage with your potential customers, learn about them and showcase your products. Working with a great online presence is not very expensive as compared to other mediums, and can lead you highly profitable.
FOCUS ON KEY CLIENT SET:
The Pareto principle suggests that most businesses have 80% of their business coming from 20% of their customers. Identifying your most valuable customers that lead to the majority of your revenues can help you reduce wasting money attracting the other set. Focusing on your key customers can help you serve them better. Focusing on your most profitable customers to reduce time/effort and costs and hence increase profits.
OPTIMALLY PRICE YOUR PRODUCTS AND SERVICES:
Your costs of offering the products and services go up over time. Consider revising your prices regularly instead of steeply in one go. Consider the prices/offerings of your key customers before working out on how your offering must be priced. Focus on delivering value for the customers, so that they consider the money they spend on your offerings worth it. You could also look at innovative new pricing models, to offer great choice and affordability to your customers.
KEEP TRACK OF KEY VARIABLES:
Make a plan, benchmark and stay on top of key parameters to become and stay profitable. Identify and eliminate any wasteful expenditure on lead generation and lead conversion. Improve your processes for better conversion with reduced effort/costs. Learn best practices in your industry and seek expert advice. Focus on increasing the number and size of the transaction with your select few customers. Selling to a customer who has a history with your company, is far less expensive than starting a new thread altogether. Keep an eye on the cost of acquiring new customers and look at creative ways of optimizing.
Successful companies are the ones that stay nimble and alert. Look at ways of doing business faster, better and cheaper. Listen to your customers and adapt to the changing market place. Use the techniques above and make the right choices for your company to boost profits.