Boosting Your Business Profits
1. Retain Existing Customers
Customer retention is a key part of boosting your business profits. It costs significantly less to retain an existing customer than it is to acquire a new one. Keeping hold of the customers you’ve worked so hard to acquire and working to capacity means you’ll be spending less on new customer acquisition and cutting down on costs.
2. Find the right customers
Segment your target audience, investigate and test the right channels to plough your money into. Finding the right customers means targeting the people, or businesses that will have a lifetime value. You should aim to target customers that will enhance your business, the rest will follow.
3. Eliminate Unnecessary Costs
A cost-effective operation will allow you to streamline your profit margins, giving you competitive prices on the market whilst retaining the same, or exceeding your current level of profits.
4. Improve Management Systems
Some businesses waste up to 30% of labour costs through ineffective management systems. Review your current structure and ask yourself, “can I delayer?” or if you run a much smaller operation, “are my current workforce working to capacity, can I streamline roles?”.
5. Review Your Prices
Reviewing your price structure can give you the options to increase your profit margins on top selling products. By making your overall product range more competitive, you can look at increasing the profit on your top selling lines and still keep your customers happy.
Alternatively you could increase demand by lowering prices across your range in order to drive more sales. A higher volume of sales could result in better business exposure and also more profit.
6. Know Where Your Profit Is Coming From
By knowing both your customers and what it is they want from you, it gives you enough insight to form a strategy on where you revenue is going to be reinvested, what products to market more and where to allocate your efforts.
7. Get Feedback From Your Staff
Your staff on the ground will have a better knowledge than anyone as to how your customers interact with your products, your service or you as a brand. Their daily interactions with customers give them the knowledge and insight as to how they perceive your business. There is arguably no greater source of information than your frontline staff.
8. Plan and Strategise
Plan, plan and plan again. The proven and most successful way to ensure you maximise profitability is to sit down, strategise and formulate a plan of action. If you go into business, or start a campaign with no idea or direction behind you, it is extremely likely that you will incur wasted spend and reduced profit as a result.
When you have established your business and have a steady revenue stream, you could look to reinvest your retained profit into diversification. Diversification is a way you can effectively grow and expand your business which, in turn will hopefully lead to profit increase.