Small business owners need to change their practices to focus more on profit, according to Patricia Sigmon, founder, and president of David Advisory Group, a firm that specializes in helping CEO’s and small and mid-sized businesses re-engineer their business practices. Despite the difficulty associated with achieving these profits, there are six strategies a small business can employ to ultimately improve their financial situation.
Change Operating Procedures
The whole basis of increasing profits is generating more revenue while decreasing costs. For example, a business could try cross-selling. In this process a company offers new goods or services that complement its current offerings. Another profit generating method is a relationship-based sales model, where a business offers customers monthly or yearly service plans to incentivize their return. A final example of a way to increase revenue without much cost is prompting consumers to try the product with special deals or discounts.
Stay Visible and Connected
It is important for a company to continuously market its product. Companies should use social media in addition to their website or blog to constantly connect with customers and make strategic alliances. Small business owners should use advertising to drive new consumers to their site. Lastly, the website needs to be efficient and appealing to the customers to pique their interest in the company.
Maximize Cash Flow
One of the easiest methods small business owners can use to ensure a stable cash flow is to offer pre-paid retainers or ongoing payment plans for their clients. For example, instead of a one time consulting contract at $125 per hour for a full day, the offering can be amended to a discounted 20-hour retainer plan at $100 per hour. While the hourly rate would be less in this case, the bill would be for a greater total dollar amount, and client would be locked into a longer-term arrangement. Although this is not the most lucrative method of increasing profits, it establishes a long term relationship and presents the opportunity of future work.
Streamline Management Costs
A great way to diminish management costs is to automate a business. The system should allow for employees to easily add data as well as update and synchronize all information within the business. This automation will allow the company to run more efficiently and help a scaled-down workforce accomplish more office work at a lower cost.
Raise the Marketing Bar
In today’s world immediate business to customer marketing is critical. Thus, a growing business should always have a presence on social media outlets to ensure more consumer exposure. Sales presentations and company promotions should be advertised to all potential customers. In addition, if the business provides a complex product or service, it might be beneficial to post tutorial videos. As a result, consumers are getting more exposure to the good as well as having the opportunity to understand it better.
Make Everyone a Salesperson
Every employee has the ability to send a company’s message. Small business owners who can motivate their employees to sell the enterprise through conferences, webinars, or social media are well on their way towards generating significant profits. If a company is to be successful, it is critical that every employee plays their part to market the product. This increased communication ensures widespread awareness of the business and hopefully future profits.
Some say its costs money to make money and they are absolutely correct. However, those that are the most successful are the people who can spend the least amount of money to make money. These six methods are affordable ways to increase profits over time and ensure the prosperity of any company.
York, M. (2019, February 05). 6 Simple Ways to Increase Profits For Your Small Business.
Retrieved June 20, 2019, from https://www.thebalancesmb.com/steps-to-increase-small-business-profits-1200720