10 Ways To Drastically Increase Your Small Business Profits.
There are many reasons why people go into business, but the most popular and main reason why people start their own business is to make money. Nevertheless, for any reason your business exists, the goal is to make profit/money, so as to live a good life. But some people have difficulty increasing their business profits.
Profit increases growth, attracts investors and keeps the business running. The more profits a business generates, the more improvements a business can make in the future. profitable businesses lead to growth and success.
So if you want your business to be successful, you need to find ways to increase your business profits. In this article, I will be showing you 10 effective methods of increasing your business profits.
- Increase Pricing.
The easiest answer for small business owners to increase their business profits is to increase their products pricing. Though, this is a no-brainer method in today’s economic society. But sometimes, it is essential to increase prices, so as to stay in business. To effectively implement this strategy, make sure you give you customers a good reason for the increase in price, and make your selling price at least 3X the cost of the product.
- Double Down On Your Cash Flow.
One of the best ways to increase your business profits is to maximize your cash flow. This can be effectively carried out by offering ongoing payment plans or discounts to customers. For instance, offer your customers “Buy Two get One free, instead of offering 20% Off discount.
This may seem not lucrative at first, but the major benefit is that it establishes customer relationships and also encourages people to buy more. This method will be a banger if it is implemented in conjunction with the first method (Increasing Pricing).
2. Reduce Expenses.
As a small business, limit your expenses to costs which will improve the growth of your business and more revenue. Due to your business being profitable doesn’t mean you should add unnecessary expenses just because you can afford them. For example, There is no need to pay for a website design, if you have the time and skill to do it yourself.
So be careful about how you decide to spend your business profits.
3. Practice Up-selling And Cross-selling.
To quickly increase your business profits, try Up-selling or Cross-selling, by offering new products or services that complement your current offerings. For instance, chiropractor offers health supplements, nutrient-rich superfoods, and Up-sell with private labeling, wax coat and other fancy finishes.
4. Ask For Referral.
Before asking for referral, make sure you offer good customer service and quality products. Ask your existing customers to refer their friends and family to your products or services. Practicing this can rapidly increase your business profits. This can be done by email marketing or as an order completion message, if your business is online.
5. Focus On Your Best Selling Products.
Instead of looking for new products which you don’t know if they will sell or not. Double down on an existing proven to sell products. For example, if you are selling a pair of Nike shoes, and the sales order keeps coming in consistently, then it is better to keep marketing it until it dies down rather than marketing new first time products. Practicing this will easily increase your business profits.
6. Sell High Ticket Products.
Sell products with at least profits that can cover low ticket products costs 3X. For example, find products that cost $100+ and sell them for $300+ . This will make you accumulate your profits even faster.
To effectively implement this strategy, add One high ticket product in the midst of 10 low ticket products. But make sure the high ticket products you pick are easy to sell and also proven to sell. Another great way to ensure you sell more of your high ticket products so as to increase your business profits, is to give your staff an incentive upon selling them. This means you might like to reward them with a team outing at the end of the month, or give them gift vouchers. You can also encourage your customers to buy these products on discount.
7. Increase Value To Your Customers.
Increasing customers’ value not only helps increase profits, but it also helps build and lengthen customers retention. This method is a perfect combination with price increment, because the more you value your customers and keep building trust, the more they will be willing to buy from you. And the more they buy from you, the more profits you make. This method also helps shorten your sales cycle, and increase your closing rate.
8. Negotiate With Suppliers.
To effectively increase your business profits, you need to buy low and sell high. If you are buying stock or using contractors, negotiating to get their rates down once again will increase your gross profit. Increasing your gross profit will surely increase your net profit also, and at the end of the day, there is more money left over to go into your back pocket. This is the best practice, while looking to increase your business profits.
9. Understand And Practice Unit Economics
Practicing unit economics will help you determine where you can save money in order to increase your business profits.
By understanding and practicing unit economics, you will see exactly how the pennies saved on both direct and indirect expenses can create room for improvement and also increase profits.
For instance, Walmart’s decision to change their parking lot light bulbs to LED and switch floor wax brands has saved the company upto $220 million.
Let’s do some quick recap about this article.
How To Drastically Increase Your Business Profits.
- Increase Pricing.
- Double Down On Your Cash Flow.
- Reduce Expenses.
- Practice Up-selling And Cross-selling
- Ask For Referral.
- Focus On Best Selling Products.
- Sell High Ticket Products.
- Increase Value To You Customers.
- Negotiate With Suppliers.
- Understand And Practice Unit Economics.
So, you can try any of the methods listed above, and double down on the ones that work best for you, so as to increase your business profits over time.
I hope I provided some valuable content.
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