Here are 13 most effective ways to improve profits in your small business:
- Buy merchandise from cheap sources
- Have branded products
- Go into other businesses
- Spend money to get money
- Pay special attention to existing customers
- Set gross profit margins
- Focus on sales
- Improve your online reputation
- Outsource jobs
- Do follow-ups
- Know what your customers need
- Adopt a continuous improvement policy
- Bottom line
It is the dream of every entrepreneur to increase profits in his business.
However, you cannot just wake up one day and increase your profits.
To increase profits in your small your business successfully, you must be able to experiment with different marketing strategies.
Going forward, the following tips will help you to optimize your profits.
Buy merchandise from cheap sources.
To increase profits in your small business, you need to buy merchandise from cheap sources.
This is because if you buy from cheap sources you will able to sell at competitive prices with little or no price objections.
However, remember that your ability to buy at reasonable prices will depend on your ability to bargain with suppliers.
You can reach out to manufacturers and wholesalers because they are in a better position to supply the right merchandise at favorable prices.
You need to price your products to drive sales.
As you are probably aware, high prices will scare your customers away. On the other hand, if you price your products too low you risk trading at a loss.
Therefore, your pricing strategy should be to remain in the middle of high and low.
However, you can maintain a certain level of flexibility, especially when you are selling to major customers.
You can even increase your profits by selling your products to different markets at different prices.
Profits: Have branded products
If possible, you can develop a new product or modify an existing product.
This way you can fix your own price and also control the marketing of the product.
Additionally, you will be able to make quick profits before competitors begin to imitate the product.
You can increase your profits by selling quality products.
Your ability to increase profits by selling quality products will essentially depend on many factors.
Firstly, you need to ensure that the product you are selling is not the type customers can easily find around.
Secondly, you will need to advertise the product on regular basis.
Thirdly, you can back it up by providing excellent customer service.
Go into other businesses
You can increase profits by going into other businesses that have low competition.
If you are the first to get there, you can make quick money before other people enter the market.
However, you need to be smart and monitor the market. At appropriate time you should be able to know when to make changes here and there in your business processes.
Profits: Spend Money to Make Money
You can use a loan to grow your business. This may sound somehow strange to some people.
For example, a short term loan used to fund a sudden business opportunity can enable you to increase profits in your business.
If your goal is to increase profits, you should ensure that there will be something left for you after repaying the loan.
Pay Special Attention To Existing Customers
One of the best ways to increase profits in your business is to:
- Increase efficiency by taking care of your existing customers.
- Offer a wide range of products from which customers can choose from.
- Make the buying process as simple as possible for your customers.
Researchers have suggested that it is always easier and cheaper to sell to an existing customer than to win a new customer.
Profits: Set Gross Profit Margin Percentage
The gross margins percentage targets can enable you to drive sales and increase profits.
This will help you to monitor the performance of each product so you can make changes when necessary.
This will enable you to identify your most profitable products so you can pay more attention to them.
You should not stop there. Find out why other products have not been profitable.
You never can tell; it could be that you are not offering what your customers need. Or that doing business with you is not easy.
Furthermore, there might times when you will need to adjust the gross profit margins.
For example, you could be hard pressed by an important customer to reduce prices for him.
It could even happen that the customer has verified prices elsewhere before coming to your shop.
Furthermore, being a bit flexible will enable you not only to sell more but also to retain the customer.
Profits: Focus On Sales
One of the easiest ways to increase profits is to focus on sales from the start.
You cannot talk of profits without talking of sales.
Furthermore, you can increase profits by:
- Attracting five-star reviews,
- Using case studies,
- Getting your brand mentioned by bloggers and news media
Asking customers for reviews is an excellent and inexpensive way to boost sales and increase profits.
In fact a five-star review of your product will enable you to sell more of that product.
Improve profits: Improve Your Online Reputation
You will need to build a website to showcase your products or services. Consumers are moved by what they see.
Adding a blog to your website and networking with other businesses will enhance the visibility of your business.
Irrespective of the size of your business, your online reputation matters a lot because it:
- adds credibility to your business
- tells consumers and other businesses that you care about them
- adds call-to-actions on your website
- lets visitors contact you easily through web forms, landing pages, email,
Additionally, it will enable you to interact with the visitors regularly.
Therefore, owning a website can actually enable you to increase profits in your business.
Most importantly, the results could be slow but it will surely be visible in the long run.
Another way you can reduce costs and increase profits in your business is to outsource jobs to outsider contractors.
This will be helpful especially, if you cannot do the jobs in-house. Or it will not be economical for you to carry out the task in-house because you do not have the personnel or equipment.
Furthermore, in some cases it might make more economic sense to outsource than to employ full-time permanent employees.
Most importantly, it is easier to let go a contractor than to fire an employee. This is because contractors will be paid on the basis of the jobs they do for you.
Do Follow Up
Yet another strategy you can use to retain your customers, make more sales and increase profits is for you to do follow-ups.
There are many methods you can use to do follow up; telephone calls, email, text messages and so on. Any of the above options can work with most businesses.
Besides, social media is always handy for follow-up surveys and reviews. The key, as always, is for you to know your audience and accurately assess the situation.
Increase profits: Know What Your Customers Need
You need to understand what your customers need and provide them.
This way, you will be able to drive sales and increase profits.
Moreover, you really need to understand why they chose to come to you in the first place. Or why they are not coming to your shop.
Furthermore, you should find out how your ease of doing business is different from others.
Therefore, once you are able to adjust your business practices to meet the needs of your customers, you will be better positioned to increase profits.
Adopt A Continuous Improvement Policy
To enable you improve sales and increase profits, you need to adopt a continuous improvement policy for your business.
This means that you have to review how things are done now and how you want them done in the future
You should understand that fewer steps mean lower costs, and lower costs often result in higher profits.
Furthermore, you should create your idea road map for your business processes.
You should continually seek for better, cheaper ways of improving customer experience and satisfaction.
Do not just be satisfied with the current state of getting things done in your business.
In all of these, your aim should always be to increase sales and increase profits.
Making sales and improving your profits is something you should not compromise.
However, some businesses do adopt new practices and find ways to become more profitable.
If your business is currently struggling to make profits, or you want to increase profits year in year out, then you should make use of the above tips.
By Samuel Ijenhi
B. Sc. Accounting [University of Benin]
Benin City, Nigeria.