Profits are your gross revenue minus expenses, so in theory, increasing your company's profits is as simple as increasing your gross revenue, and/or decreasing your expenses. Of course, if it were that simple, no business would ever fail.
So here are some simple action steps and mindset tips to increase the profits of your small business.
Use Information Marketing
Customers like knowing about a product and industry before they meet with a salesperson. It lets them feel like they’re in control and getting the best deal. Information marketing is a way for you to provide them with that assurance while adding them to your sales pipeline.
Providing your customers with free informational material is a way for you to increase awareness of your brand, as well as consumer confidence in your brand. If you provide neutral-sounding reading materials that explain what to look for in a product or service you offer, you can easily explain to your customers later how you meet or exceed those criteria.
Getting potential customers to sign up for a mailing list, or give contact information to download reading materials, will allow you to provide them with those materials while opening the door for follow-ups and sales.
Be Extremely Visible
Any small business should have a website and a social media presence, as well as online and/or in-person ad campaigns. For your company to be at all successful you need to be visible.
To take it to the next step, you need to be extremely visible. Being extremely visible is about being exceptional and transparent. Past a certain point, just being seen more often will start to yield diminishing returns. So instead, you want people to notice your differences so they'll ultimately choose you over other companies that have the same visibility.
Share stellar reviews and glowing testimonials from customers; use eye-catching examples of your work or product; publish any and all good news about the company, including new certifications and accreditation; add a human touch with stories about staff. Extreme visibility means optimizing your existing advertising and online presence.
Get More Money From Your Clients
Okay, yes, this one seems obvious. The question is--how?
If your business uses an hourly or per-engagement model, consider offering bundles or prepayment arrangements to your customers. This might require slightly reducing your rates to make these bundles of prepayments appealing, but it means a larger and longer commitment from those clients. Bundles and prepaid contracts mean they’re paying you more overall, even if it’s a slight decrease in your rates.
If you sell a physical product, adding maintenance contracts can increase the amount your customers pay upfront, in exchange for a reduction of the rates you’d typically charge to repair or service your products.
Automate Management Procedures
As a small business owner, much of your day is probably sent on bookkeeping, supply chains, and workflow and scheduling, but there are far more productive (and therefore profitable) uses for your time. You’re probably looking forward to the day when your company is large enough to hire someone to take over those responsibilities.
However, even as a small business, there are countless options for software that can handle scheduling, bookkeeping, and all of the other day-to-day minutiae that take up so much of your time.
Using automated software for these tasks can also reduce human error that can drive up expenses through costly mistakes.
Everyone Does Sales. Everyone Does Service.
For a small business, all of your employees, even those who aren’t dedicated sales or service representatives, need to be involved in some form of sales and/or service behavior. Every new customer you land makes a difference, and keeping every customer matters.
Employees who aren’t sales reps should still be engaging with the public in ways that can generate leads or interest in your business. They should be familiar with other products and services outside of their immediate responsibilities so they can up-sell customers who could be served by those additional solutions.
In the same vein, employees who aren’t dedicated service reps should be doing everything in their power to provide solutions and support to existing customers. Receiving that level of support from your entire team will make your customers feel valued, and more likely to use your services.
Keep Your Employees
Keep your employees happy. Keep your employees invested. Keep your employees informed. But most importantly--keep your employees.
If your employees are happy and invested in your company, they’ll perform at a higher level, and engage with customers in a more positive and meaningful way. They’ll even be willing to go above and beyond for the company. Having employees who know they’re a valued and essential part of your business is a huge key to success.
Likewise, keep your employees informed. If they know the ins and outs of your products and services, as well as what changes or new offerings are coming down the pipeline, they’ll be able to do their jobs more efficiently and will feel like an essential part of your business.
Finally, employee retention is a huge factor as well. It costs thousands of dollars to hire and train a new employee. Not only that, the downtime you’ll experience while filling a role, and lessened productivity while new hires learn the ropes, all increase your business costs. Keeping your employees, especially high performing ones, checked in and on your side can make a huge difference.
Whether it’s opening a new location, or adding new goods or services, expanding your business is a great way to increase your profits.
Expanding to a second location is going to power a substantial increase in both revenue and costs. However, it will allow you to utilize existing resources, like marketing, supply chains, and management tools. So in theory, your second location will have a lower operating cost than your main location because of those areas of overlap.
If you’re not ready to expand to a second location, adding new products and services that overlap with your existing offerings can drive up profits as well.
Increasing the profits for your small business means using the tools and resources you already have with optimal efficiency. Look for the maximum value in every customer and employee, and find creative ways to generate more engagement.