You’ve done the hard work of establishing your small business—now it’s time to turn those efforts into more profit. But how?
With some smart strategies, you can unlock the potential of your business and boost your bottom line. We’ll cover some simple strategies for increasing profit in a small business, from reviewing your pricing strategy to improving time management.
Maximize Profitability for Your Small Business With These Tips
Read on to learn how you can maximize profitability, improve cash flow, and take your small business to new heights.
Double-Check Your Bills
When you receive a bill, take a few moments to go through your bills line by line and make sure that all of the charges are correct and up-to-date. This is especially important for services with recurring fees, such as cable or cell phone bills, which can easily be increased without you noticing.
Next, check any automatic debits to 1) ensure you authorized them and 2) for those that you have previously authorized, many companies will offer automatic billing as a convenience to their customers, but fees can sometimes increase. Double check that you’re receiving the same services for the same price in previous months. You should also consider hiring an accountant that works with you throughout the year to track income and spending to prevent cash flow mistakes and monitor your gross and net profits.
Analyze Your Pricing Strategy
Pricing can be the difference between growth and stagnation. That’s why it’s important to understand the market, and price your products accordingly.
Start by thoroughly reviewing your current pricing to get an understanding of how you account for each job, product, or service, basing your analysis on factors like market conditions, consumer demand, and the cost of goods sold. From there, you can look for opportunities to increase based on value, such as by offering three pricing tiers for your services. That way, you can give customers more options, allowing you to cater to different needs and budgets, and an incentive to opt for the higher-priced tier, which can maximize profitability.
Negotiate Value, Not Price
Face cash flow problems by focusing on what clients and prospects need. By adjusting to what they seek, you can better describe why your product or service is unique and worth the asking price. The key is to rely on the value and benefits to keep the conversation positive and engaging. That way, you can reach a fair agreement and increase sales without sacrificing profits.
Avoid Discounting to Improve Cash Flow
Discounting can give customers multiple wrong impressions, like that your service or product isn’t worth its normal price, or that you’re inflating prices. It can also cause them to delay purchases, hoping for an even better deal tomorrow.
Try adding value by providing something extra with the purchase that makes it worth more than its price tag, like a free consultation, an additional service or product, or a limited-time bonus offer. You would be showing customers that your prices are fair—and you’re willing to go the extra mile.
Another way is to incentivize customers to return. Consider offering loyalty discounts or rewards programs that they can use toward future purchases. You can also use targeted campaigns and personalized offers to reward customers who have already shown an interest in you.
Focus on Tasks That Increase Profit
When you’re running a small business, it’s easy to get bogged down in the small tasks of everyday life. But you can maximize profitability and improve your time management by prioritizing some of (or all!) the following tasks:
- Identify your most profitable customers or products
- Determine how to increase dollars per transaction
- Analyze your average dollar amount per transaction
Avoid Overtime Work
The key to avoiding overtime is to track the amount of time each job requires and create a corresponding work schedule. This may require some trial and error and productivity improvements, but it can be much more cost-effective than having to pay overtime. Additionally, employees allowed to create their own schedules within general parameters will be more likely to take ownership of the process.
If overtime is unavoidable, consider adding an additional charge to your base price if a customer requires service outside of regular hours. This enables you to recoup some of the extra costs and still provide customers with the services they need.
Another powerful way is by crunching some numbers to figure out where you can make modest improvements to produce big results.
Consider Business Growth Coaching
At Inspire Results Business Coaching, we specialize in helping increase profits in small businesses, working with our clients to develop customized solutions tailored to their specific needs. Contact us today to learn more about how our experienced coaches can provide you with the help you need to achieve business success.
