Business profitability: 10 ways to boost it

Ten ways to increase your profitability

Many business owners work hard, very hard, just to cover expenses or stay afloat. Each of us deserves a reward for our efforts, be it financial or personal. The question to ask yourself is whether you are directing your effort in the right places to get the reward you want.

Of the companies that I have seen and worked for, there are many ways to waste effort, that is, to work hard, but on the wrong things. Here are ten of the most common areas where the performance of your efforts can really increase.

1. Inconsistent marketing

Once you have committed to owning and running a business, you should be equally committed to marketing and selling the products and services of that business. It is difficult, if not impossible, to stay and remain profitable without a commitment to ongoing concerted marketing.

To get more out of your marketing, create a simple marketing plan that includes marketing activity every day, every week, and every month. Marketing plans combine formal activities (such as advertising, promotions, and copywriting) with informal activities (such as making new contacts). Don’t underestimate the power of talking to people about what you do. Take advantage of every opportunity, every time.

2. Fear of asking for the sale

Don’t we think that asking directly about someone’s business means appearing aggressive or offensive? But if we have this attitude, we are missing the opportunities to generate profits. Worrying more about what someone thinks of you than about bringing more money into the business is a very common mistake. If you find it difficult to “ask to sell,” you can be sure you are not putting in as much money as you could.

The most effective way to approach this problem is to practice asking for the sale in language that you are comfortable with (not too vague, please). Write down what you want to say first, then practice it over and over again. There are also many things about how to handle objections. Prepare your answers to the most common objections so you are well put together before talking to your prospects.

3. Get help

Most business owners have strengths in one or two specific areas, but whether by necessity or design, they often end up working in areas where they are not strong. This creates inefficiencies and the possibility of making mistakes in the business. To compound the problem, we don’t ask for help right away, but we struggle to do the things we’re not ready for (saves money, right?) But every day that goes by with your business running at less than maximum efficiency means money. lost out of pocket.

Determine where you add the most and least value to your business. Pay someone to help you with these low-value-added activities. It is best to invest your time where you add the most value. If you can do more of this type of activity, your business will benefit.

4. Use your existing customer base

All the research tells us that it is easier and cheaper to keep working with the clients you already have than to get new clients into your business. If you don’t follow up on past customers on a regular basis, you’re reducing your potential for profitability.

Develop strategies to keep your customers with you, such as loyalty plans, regular communications, and special offers. Put in place a regular process to follow up with your customers after they buy from you.

5. Expense management

Smart business owners regularly evaluate their business expenses and find ways to cut costs without sacrificing quality. If you haven’t completed a cost analysis lately, you may be paying more than necessary, which will reduce your profitability.

At least once a quarter, you should review your expenses and negotiate any necessary adjustments. Sort everything you spend into 3 headings: Essential, Nice, and Nonessential. Everything in the last two categories is at stake – be ruthless!

6. Spend large amounts on shiny and elegant marketing materials and wait for business to arrive without any extra effort.

Glossy brochures and nifty marketing materials are a nice addition to more active forms of marketing, like meeting people, calling people, and talking to people. However, brochures and business cards, beautiful as they are, are not a substitute for direct contact. If you are spending money on eye-catching marketing materials rather than marketing outright, your profitability will suffer. The most effective form of marketing comes from your talking about your business to others.

Marketing materials are an expense, and to be sure they work, you need to monitor your return on investment. At the very least, you need to keep track of where new business is coming from so you can get an idea of ​​whether your marketing materials are contributing to any new business you land.

7. Spending a significant amount of time in low-performing activities.

Don’t we all know about this one? If you spend most of your day completing tasks that are administrative in nature and / or that other people can easily complete, then you are not making the most of yourself. For most of us, the best value-added activity we can engage in is doing business at the door by building relationships, talking to potential customers, and promoting our business.

What value do you place on your time? Assign a competitive hourly rate for the market and industry you work in; it can be from $ 100 per hour or more. Then ask yourself if you would pay someone that hourly rate to process accounts or perform administrative tasks. If the answer is no, find a way to do these low-performing activities for a lower hourly rate. Hire an accountant or assistant for a few hours a week and spend your time doing the valuable work.

8. Not charging enough for what you do.

This challenge seems to arise especially for people who sell services. Either we are ashamed to ask for the amount we want, or we just accept less money than we need, so we get “some money” instead of “no money.” But beware, after a while, working for too little can leave you exhausted and resentful, not to mention the impact it has on your profitability.

You also don’t need to advocate for an increase in your rates. It is normal business strategy to review rate structures, make changes, and advise clients. And, contrary to our fears, it often happens that trade levels improve after rates are increased. We seem to attract an entirely different class of customer when our rates reflect the value we offer.

9. Not making sufficient use of technology, which could save time and effort.

As a business owner, you have a set amount of time and energy within which you must maximize your profits. Technology can help you do this in the form of autoresponders, voicemail, wireless internet connections, voice recognition software, SMS from your computer, etc. All of these tools are widely available to us and designed to save time and effort. Each of us must continually look for ways to make business processes more efficient through the use of inexpensive technology.

Often the problem is that we don’t know what we don’t know. Some wonderful tool may be available, but we don’t know if it exists. You need to stay up-to-date on the latest products by regularly registering on telecom and business sites.

10. Comply with outdated business models or plans.

You’ve all heard it before: doing things the way they’ve always been done means you’ll get the results you’ve always gotten. If you are not satisfied with the results, you need to re-analyze what and how you are doing things. A crafty entrepreneur has a mindset that always challenges the way things are done in business.

Another great way to find new ideas is to attend seminars and conferences on various topics. If you have just one idea to put into practice in your business, then that seminar has been worth it.

If you are serious about improving the profitability of your business (and aren’t we all?), Taking action in these areas will help you make more money and have more fun in your business. And that’s what it’s really about.