It’s an inescapable, unavoidable truth. That in a society defined by success and profit, year-on-year growth is essential for business survival. It’s a cutthroat world out there, and every entrepreneur must endeavour to increase their company’s profit margin from last year’s or risk demise.
However, rising supplier costs, shifting consumer demands, turbulent political times and technology continuing its game changing streak mean that the only thing predictable in this business world right now is unpredictability, particularly for small businesses.
There are, however, ways to ensure your company thrives with each passing year. These are those; our 5 IDEAL ways to increase your small business’ profitability.
CUT COSTS, INCREASE PROFIT MARGINS
To boost your business finances, you must look for ways to cut costs each and every day. And just as there many ways to make money, there are tenfold more to lose it. To negate the dangers and pitfalls of this, look for places where you might be spending unduly, and reduce or eradicate them. For example, the cost of your electricity, gas, any other energy and internet will be subject to constant, competitive change, so do yourself a favour and compare business energy prices with Utility Bidder to secure the best deal.
It’s also vital to be examining your profit margins daily; a few tweaks to your pricing can make a big difference to your company’s annual profit margin. Regular restructuring and tinkering of your prices can make a big difference. In short, the finer details matter.
CONVINCE YOUR CUSTOMERS TO BUY MORE
According to recent research, existing customers are likely to spend 30% more per order in comparison to new ones. It is, therefore, essential to retain your customers’ loyalty and to encourage them to buy more with each purchase. To ensure the former and prompt the latter in tandem, consider:
- Use an incentive marketing strategy, such as starting a loyalty program, to reward repeat custom
- Focus on upselling and cross selling
- Stock a bigger product range
- Introduce complementary products
- Entice customers with exclusive email marketing promotions
Closing deals quickly has become a necessity in some industries due to increased competition. Understanding what a digital sales room is and how to fully utilise it can be beneficial in these situations. Such aids can prove incredibly successful in boosting sales since they are often more focused than traditional advertising.
BENCH PRODUCTS WITH A LOW PROFIT MARGIN
Every product you sell should offer a big profit margin. No excuses; there are no hangers on welcome here. If an item has low profitability, it might be beneficial to remove it from your range entirely to focus on products that will provide your business with a greater return on its investment. We’d recommend doing this even with items which you feel chime with your brand or offer clarity on your proposition because, in the end, profit always wins out. Regularly calculate your products’ profit margins and discontinue items that offer next to no value to your business regardless of their other appeal.
EVERY EMPLOYEE IS A SALESPERSON
While we’d hate to condense each person’s inherent value into their worth to your company, we’re talking business here, so contradict ourselves we shall. Every employee will have an opportunity to promote your business at some point, whether that’s within the four walls of your work or on their own time. To increase your annual revenue, encourage each member of staff to be a salesperson and brand ambassador at every available opportunity. Within any business focused on increasing its revenue, loyal, diligent members of staff should be incentivised with individual rewards, a better working environment, and the possibility of promotion, all of which will encourage your team to become a better motivated, homogenous unit.
DIVERSIFY YOUR MARKETING
A rock-solid online presence is the single most important modern tool in your business’ armoury. Use it often, enthusiastically and precisely and you could increase your profitability ten-fold. Aim to establish your business as an industry leader by raising the marketing bar. Custom will follow. As a snapshot of more diverse marketing techniques of successful modern companies, you should consider:
- Hosting webinars
- Offering helpful tutorials
- Featuring product demos
- Launching a podcast
Don’t forget to accurately measure all your marketing efforts in terms of their reach and success in gaining custom to identify the most effective strategies for your business. Without feedback and reaction, growth is down to luck and luck alone.