Most businesses think too hard about turnover/ revenue and not hard enough about profit. For most businesses there are quite a few effective and simple strategies that can increase profits - here are seven!
1. Put your prices up
Most business people don't realise that if they work on a profit margin of say 30% a small 10% increase in their prices will produce a whopping 25% more profit. If you can, increase your prices a little it makes a big difference to the bottom line. More info on this in my free Growth Guide that can be downloaded here.
2. Stop discounting
Using the same maths and profit margin as point 1, if you discount your products by just 10% you need to find 150% more sales than had you not offered a discount. Discounting disproportionately eats into small business profits. Instead of giving discounts trying to offer something for free that costs you little but has value to the customer as an incentive. For example give a free one hour training session with your product or service.
3. Remind your customers often what you sell
You might sell 20 products or offer 20 services, but I'd bet your customers don't know this or have forgotten. Win more new business from existing customers easily by regularly reminding them of all the products and services that you offer. For example send your complete product / service list with every customer newsletter.
4. Add some new 'premium options' to your product or service to increase sales value
If you sell a higher priced item or service, create some smaller premium options that may be purchased by your clients when they buy the main product. These new products should be at a lower price but have a high profit margin. Many customers will purchase these options without thinking too hard and your profits will be increased. For example can you sell and 1/2 day training session with the product?
5. Get rid of poor clients
Most of your profit will come from a small number of your clients. Most of your grief and hard work will come from another small group. Analyse your clients, then focus on the good ones and get rid of the bad ones. Most likely you will make little or no profit from the bad clients thus getting rid of them will actually have a positive effect on your profits as you will have to do less work. It feels wrong turning away work, but it's so right!
6. Decrease your customers repurchase interval with special offers
If your customers buy from you every 12 months, your goal should be to reduce this to 11 months. Special offers are a great way of making people make decisions quicker and earlier. Keep good records of customers and contact them with an offer instead of waiting for them to call you.
7. Teach all customer facing staff how to spot and then deal with a sales opportunity
Most businesses have individuals dedicated to sales, however they normally have lots of staff speaking directly to customers on a regular basis. More often than not these staff do not spot sales opportunities and the company misses out on potential new business. Teach your staff the basics of how to spot an opportunity and then how to refer that to somebody that can deal with it effectively. Offer an M&S voucher for all opportunities that ultimately become sales, you'll be amazed how this finds new business.