There are 19 ways to increase profits for your business.
However, to enable you to increase profits, you need to make changes here and there in your business.
You also need to be smart to be able to increase profits without some serious consequences.
Increasing profits also means that you must be able to experiment with different marketing strategies.
Here are some tips that can help you to increase profits for business.
Buy products from cheap sources.
To increase profits for your business, you will need to buy products from cheap sources.
This is because if you buy products from cheap sources you will able to sell your products at prices customers will be able willing to pay.
Furthermore, ability to buy products from cheap sources means that you must be able to negotiate favorable prices with suppliers.
Fore example, you can negotiate with manufacturers, importers and large distributors.
Review your pricing strategies
Before you can increase profits in your business, you need to carry out a comprehensive review of your pricing strategies.
This will enable you to set your prices at competitive levels
If you set prices too high, you can scare your customers away.
On the other hand, if you set prices too low, you risk operating your business at a loss.
Furthermore, you can even increase your profits by selling your products to customers in different markets at different prices.
Therefore, to increase profits you must closely monitor market prices so that you can adjust your prices as the need arises.
Increase profits: Develop or modify an old product
You can increase profits by developing or modifying an existing product.
Developing a new or modifying an old produce can give you the opportunity to fix prices that can ensure that you up your game.
Beyond that you will be able to:
- Dictate the price of the product
- Track the marketing of the product
- Make quick profits before competitors move into the market with the same or similar product.
In other words, you can make quick profits before competitors begin to come in to share in your harvest of profits.
Sell high quality products
You can increase your business profits by selling high quality products.
By selling high quality products, customers who have high taste will be willing to pay a little more to buy from you provided they get value for their money.
However, to succeed with this strategy you must:
- Ensure that the product you are selling is not the type customers can easily find around.
- Advertise your products regularly
- Back it up with 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 do proper market survey to ensure that the venture will be profitable.
While there, you need to be smart enough and closely monitor the market.
If you sharp enough, you can know when to make changes here and there to ensure that this other business turns profit.
Increase 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 obtained from the bank to fund a sudden business opportunity can enable you to increase profits in your business.
A word of caution here. Before you can ask lenders for funding, you need to ensure that the business can pay back both the principal and interest as agreed..
Pay Attention To Existing Customers
A great way to increase profits in your business is to:
- Increase efficiency in your service delivery
- Constantly review and upgrade your ease of doing business
- Offer a wide range of products
- Encourage your good customers by giving them trade or cash discounts
- Make the buying process as simple as possible for your customers.
Experts have suggested that it is always easier and cheaper to sell to an existing customer than to win a new customer.
Remember that regular customers are the most profitable segment of your customer base.
Leads generation requires that you reassess your your sales strategies.
It should reveal areas where you can your sales efforts are lacking.
Furthermore, it can also reveal other markets that you never thought existed.
Increase profits: Set Gross Profit Margin Percentage
The gross margin percentage target can enable you to drive sales and increase profits.
Furthermore, setting gross profit percentage for each product will enable you to identify products that:
- Are not selling fast
- Need to be dropped or modified to make them attractive and marketable
- Are more profitable.
You should not stop there. Find out why some products are not selling or are not profitable. Who knows, you might be able to do one or two things to make them attractive to customers.
Furthermore, there might times when you will need to adjust the gross profit margins.
Raising prices or lower them should depend on the following factors:
- Forces of demand and supply
- The level of competition
- Your marketing skills
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 can enable you not only to:
- sell more products
- Retain your customers
- Make more profits
Reducing your inventory can save you some money.
For example, if you are carry excessive stocks and customers are not coming in, you will lose money on:
- cost of capital
In that case, you can consider selling them off using sales promotion and giving out some incentives to encourage your customers to buy the products.
Furthermore, you can sell off ‘dead lines’ at least to free up the space and cash tied down in them.
More importantly, you should not carry excessive stocks.
You can set buffer stocks or Economic Re-order level for each item of stock in your shop.
Increase 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.
You need to focus your talents and efforts:
- Selling your most profitable products
- Using effective marketing channels such as
- Radio and television
- social media and so on.
Furthermore, you can increase sales and profits by asking customers for review of your products.
For example, if your product attracts a five star review, that product will nearly almost sell itself!
This is because five star review is an endorsement that the product is something people will want to put their money.
Review your business processes
To increase sales and hence profits, you need to make it possible for customers to do business with you in seamless manner.
In other words, you need to ensure that you regularly review the ease of doing business with you.
For example, you need to review the way you manage your business processes.
Furthermore, customers want to see continual improvements in your business processes.
Remember that customers are the kings and queens. And so you need them more they need you.
Also remember that without customers, your business will be worthless.
And your wallet will be empty.
Increase profits: Improve Your Online Reputation
You will need to build a website to showcase your products or services.
Consumers are more moved by what they see than what they hear.
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 online.
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.
Reduce business expenses
You need to reduce your business expenses to increase profits in your business.
For example, you can re-negotiate with your landlord to see if he can allow you to sublet part of the excess space in your warehouse to another trader.
If he agrees, this will reduce the amount you will have to pay as rent.
In other words, you and the person you sublet the shop/store/warehouse to will share the rent. That will be cool for you.
Beyond that, you can go through your profit and loss account to identify business expenses that can be:
- Or even eliminated altogether
Increase Profits: Outsource Jobs
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.
Alternatively, you can outsource tasks if it will not be economical for you to carry out the task in-house pr because you do not have the personnel or equipment required to carry out the task.
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.
Get Feedback from customers
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,
- Text messages
- Personal visits to customers
Any of the above options can work with most businesses.
Furthermore, social media is always handy for follow-up surveys and reviews.
Most importantly, the key is for you to know your audience and accurately assess their needs, tastes and preferences and address them.
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.
Conversely you should find out why they are coming to your shop.
Furthermore, you can 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.
Increase Profits: 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 business processes mean lower costs, and lower costs often result in higher profits.
Furthermore, you should create your ideal road map for your business processes.
You should continually seek for better, cheaper ways of improving your 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 reduce expenses.
Making sales and improving your profits is something you should not compromise.
Furthermore, you can try to adopt new business practices and find out how you can your business can become more efficient and 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
Founder: Ijenhi Business Solutions.