As a business owner, you should know that sales alone won’t decide your company’s success. The accurate measure of any business’s success is the profits it can make. The more profit a business can earn, the more successful it will be.
Undoubtedly, increasing your total annual profits will require growing sales. But here the kicker! If you aren’t careful enough, increasing sales through every possible strategy might decrease your margins. A general rule for financial success is that you cannot increase your profits and margins directly.
However, the best thing you can do to expect an increase in your business’s profitability is to improve the variables that decide the profits you earn. These variables can range from operational costs to something as simple as a website. That said, listed below are a few strategies that can help to increase your business’s profitability.
Upskill Your Accounting Know-How
Financial risk is something that you should expect when owning a business. Particular risks such as introducing a new product can have unexpected benefits. However, it will be tough to imagine a situation where taking risks with your business’s accounting and financial practices will prove advantageous in the long haul. Bad financial management and accounting can severely hamper your business’s cash flow management and bookkeeping, resulting in increased business costs and decreased profitability.
On the contrary, by completing an MBA with accounting concentration online degree, you can quickly increase your accounting know-how and manage your money and books properly. You will be able to eliminate any wasteful expenditures and identify opportunities to save money and maximize your revenue. You can also use the same knowledge to make your business more tax compliant and reap the benefits of filing early returns.
Improve Your Website
People will use your website to find information about your business before deciding to purchase any services or products from it. What can you do to improve potential customers’ experience while building trust in the process so they can take the final step and purchase your products or services? Well, the answer to this is easy- improve your website!
Your website does four things;
- Explain what your business is all about and the products/services you sell
- Entice the customer to make a purchase
- Make the purchasing experience extremely easy
- Allow customers to get in touch with customer support without the hassle
By ensuring that your website is user-friendly, clean, and up-to-date, and mobile-responsive, you’ll entice customers into clicking that ‘buy’ button more frequently than ever before. Also, after setting up your website, do an SEO audit. It will help you understand how your website ranks on Google so that you work your way to climbing up the SERPs for more traffic and conversions. It will eventually lead to better profits.
Actively Communicate with Your Customers
Nowadays, consumers want to have a solid relationship with the businesses they patronize. After all, it will be beneficial for you as a business owner because you’ll gain valuable insights through regular interactions.Communication with your customers shouldn’t be a one-way street. So don’t only ask them for feedback.
Instead, try to offer something valuable such as discounts or advice in return for their feedback. There are many ways to communicate with your customers and build a lasting relationship with them. These include face-to-face conversations, interacting via social media, newsletters and email, and forums. Remember the Pareto Principle? That is what building long-lasting customer relations and loyalty are all about.
Automate Business Processes
One of the most effective ways to reduce operational costs and improve profits is automating your entire business processes. A good automation service or software will help you with day-to-day stuff ranging from inventory management to payroll disbursement.
Automating your processes will remove any extra burden from your employee’s shoulders. They will work more efficiently and give all their time and efforts to more essential aspects of your business. Think about it; would you rather have an employee deal with customer complaints or pack orders? You can easily automate your packaging and order fulfillment process and allow employees to work on vital business elements.
Collaborate with Other Businesses
Is there a non-competing business that targets the same industry as yours but meets different customer needs? You might not consider something like this when you begin. Still, you might want to partner up or collaborate with other businesses.
It can be something as simple as promoting each other’s products on each other’s websites or sending out a newsletter to your partner’s customers. When partnering up, always ensure you set clear guidelines regarding cost-sharing, profit sharing, and overall efforts.
It is an unpopular option, but most marketing experts say it is a no-brainer to increase costs if you want to increase profitability. To decide a price, you need to consider:
- The product’s manufacturing cost
- Delivery cost
- Competitor’s prices
- Business operational costs
- The last time you raised prices
After reviewing these points, settle on a fair price increase. Include pricing data in your business plan, so you can easily access it later on if required. The next step to take is to communicate the intended price increase to your customers. You have to explain to them why you deiced to increase your prices. If you can explain to them that the recent price increase was due to introducing a new feature or update, don’t forget to mention that in your communication strategy.
In the end, always remember that a price increase may lead to complete failure. Of course, a price increase doesn’t mean that you get up and suddenly increase 100 dollars on a 50 dollar product. Be wise with your price increase and constantly analyze the situation before you do so.
Now, more than ever, it is vital to be creative to be profitable. Before doing anything else or incorporating a new strategy, perform an audit on your expenses to know if you can avoid or reduce costs. Consider wetting your feet in the sea of countless free options such as upselling or price hikes.