So, how is your business doing?
Are you making a sizeable profit, or are you struggling to make ends meet on a day-to-day basis?
To ensure your business survives in the long-term, you do need to focus on your profits. If you aren’t bringing in the money you need to support your business, then you will be in a very precarious position.
Of course, this is nothing new to you. You might have read the above statement and nodded your head in full agreement. You might be taking the relevant steps to increase your profits already. However, care needs to be taken. If you are taking action but not seeing results, then you might want to implement smarter thinking within your efforts to make money.
In this article, we will offer you a few suggestions. If you aren’t making a profit, then our tips should be useful.
#1: Look for areas where you are wasting money
We aren’t talking about frivolous spending.
You already know that expensive office lunches and tech purchases your business doesn’t need border on being wasteful.
However, there are other ways in which you might be wasting money.
When did you last renew your business insurance, for example? When did you last switch to a different utility provider? Have you shopped around for a cheaper supplier for your office equipment?
To save money and maximize your profits, you might want to secure the services of an insurance specialist, use a price comparison site, and check online for more affordable supply companies. You might also want to negotiate with the companies you currently use, as you might be able to persuade them to give you a better deal if you threaten them with your exit. By taking these steps, you won’t be wasting money where savings could be made.
And there are other areas where you could be wasting money.
Are you outsourcing tasks that don’t need to be outsourced? If you have employees with the necessary skills, then assuming they have the time to commit to these responsibilities, you might want to concentrate on them in-house.
On the flip side, do you have more staff than you need? If you are forking out money on salaries and staff benefits for people who don’t do very much within your business, then you might want to rethink your staffing strategies. It might be better to employ people on a part-time rather than a full-time basis. And to save money further, instead of taking on new staff, you might want to farm out work to freelancers occasionally, as you wouldn’t have to pay them anything other than the fee for work completed.
So, consider your business. Could you be spending money unnecessarily? If you can find ways to cut expenses across the board, then you should see an increase within your profit margin. Operate smart thinking, and take the necessary steps to stop any money leaks within your business.
#2: Rethink your marketing strategy
There are all kinds of marketing options to consider within your business.
From digital marketing to offline marketing methods, there are many ways to spread the word about your product or service. And being smart, you will have implemented some of these within your marketing strategy already. By doing so, you are almost guaranteed to make a profit.
We say ‘almost,’ as you might not be seeing a return on your investments. If you are throwing money away on marketing that doesn’t work, then you are never going to make your hoped-for profits.
So, take a step back and work out what is working and what isn’t. To help you, there is some useful advice in this article on measuring your marketing ROI. Relate it to the efforts you have made, and consider where you might be going wrong. It might be that you aren’t hitting the right demographics, for example, so you should consider the types of people you should be targeting, and change your approach, so you don’t waste money trying to reach those consumers who have no interest in what you have to offer.
And as well as trying to reach new customers, think about the people who have already used your business. These will be the people who do fall into your demographic, so don’t let them slip away when distracting yourself with potential new customers. Email them occasionally with discounted offers, and let them know of new products and services that your business is able to offer them. You might also find ways to reward your loyal customers, as not only will you see them return to you again and again, but you might also see an upsurge in new customers once they spread positive word-of-mouth about your business. Remarketing to existing customers is often cheaper and more effective than marketing campaigns to secure new customers, so don’t forsake this idea.
#3: Keep an eye on your competitors
If your business isn’t making a profit, then it might be because of your nearest business rivals.
If your competitors are offering your demographic something better than you, then potential (and even existing) customers might ditch your business in favor of these rivals.
And if you are doing little to differentiate your business from that of your competitors, then you are going to struggle to find your niche in the marketplace.
So, the first thing you need to do is research your competitors.
You can do this by Googling businesses similar to yours, and by visiting their websites. Take a look at what they are offering, consider what they are doing better than you, and make a note so you can work on improving your business.
Tap into their social media networks too. How many followers do they have? How are they promoting their services to others? Again, take note, and while this is a little underhand, you might get in touch with their followers with news of your own business.
When you have gathered all of the information you need, you will then have the impetus to make improvements. So, you might improve your website if it pales in comparison to that of your competitors. You might offer your customers something that your rivals aren’t, such as a better returns policy and a more functional product. And as we alluded to previously, you might want to find your own niche, so that you aren’t offering the exact same thing as your rivals.
However, be careful in your effort to win new customers and retain existing ones. Don’t offer a cheaper product if this is going to undercut your profit margin. And when considering your own niche, don’t provide a product or a service that will be irrelevant to others.
There are better ways to gain new customers and earn their loyalty without putting yourself at risk of a loss with a cheaper product, so have a look at these cost-effective examples. And seek the feedback of your current customers when thinking of new services to offer, as you might then gain an understanding of how to move forward to improve your business.
By taking these steps, you should pull yourself away from the literal and metaphorical traps of your competitors. You might then make more of a profit because you should see an upsurge in customers coming your way.
#4: Take calculated risks
Risk-taking could improve your profits and save your business, so don’t be afraid to step out and do something new. However, calculate the risks to your business, so you don’t make a loss instead of a profit.
So, you might decide to increase the pricing of your product, for example. There is an obvious risk here, as your customers might then ditch you in favor of your competitors. However, if you have already earned customer loyalty, and if your product is markedly better than that of your rivals, then this is one risk worth taking.
You might also change course within your business with a new product or service. As alluded to in our last point, there is a risk here, as you might make a misstep and concentrate on something of little worth to the consumer. However, by using surveys within your market research, you will get an understanding of how viable your new ideas are. If you get a positive response, you might then consider the risk worthwhile.
And should you start seeing signs of business growth, you might also take on more employees. As we discussed earlier, this is risky if you don’t have enough work for them to do. But if you can see the potential for greater profits with more people on your team, then this is another risk worth taking. Be sure to speak to an accountant for advice, however, to make sure it is financially viable for you do so.
There are all kinds of other risks you could take as a business owner in a bid to increase your profits. No matter what they are, use the principles from the examples we have discussed here. Calculate the risks to your business to ensure you don’t bring yourself closer to financial ruin rather than financial success.
With wise thinking across the board in your business, you might start to see more of a profit. Use the suggestions we have given you here, and then continue your research online for other ways to move your business forward and to generate more income.
We wish you every success with your business.