10 Ways to Increase Your Profits

Sometimes turning over a profit can seem just out of reach for a small business. There are many ways to boost profits and these can easily be broken down into two simple methods:

1. Increase your profit margin by lifting sale prices, reducing costs, or both.
2. Increase the volume of sales you are making.

They sound simple, but how do you go about doing this? Here are some practical examples:

Increasing your profit margin:

1. Most importantly you need keep accurate records so you can monitor the profit margin on individual products and services and keep tabs on the various factors that affect them. You could consider eliminating products or services with a low profit margin and increase your focus on the better performing goods. This should be done with caution; you should question whether these lower performing products are one of the main attractions for customers, in which case you should hold on to them.
2. Take up discounts whenever you can, stock up when your suppliers are running promotions and take up prompt payment discounts where possible. Keep a close eye on your costs, challenge any price rises with suppliers and shop around for cheaper rates.
3. Increase your prices.  Monitor the cost of producing your products and the prices your competitors are charging and increase your own prices in with these in mind. You may lose the odd customer but the increased income generated from your less price-sensitive customers will make up for this.
4. Look for easy ways to add value to your product. The value to your customer will be the benefit they receive from the product after the costs of obtaining it. This cost includes the monetary value as well as the time, effort and emotion invested in the purchase. By eliminating any difficulties associated with the purchase, such as delays, long phone calls or faulty products you can increase the value without actually giving anything away.
5. Improve your efficiency to reduce costs. Does the business run as smoothly as it can or could you streamline your back office procedures further? It may be worth outsourcing administrative tasks to benefit from the knowledge of someone who specialises in this area. Embrace time saving technology, a good example of this is cloud accounting software. Xero in particular offers a number of add ons such as the facility to upload your bank transactions direct from your online bank statement.

Increasing your sales volume:

1. Try offering a series of products or services wherever possible, such a six session training course or a set of products which interact with one another. This allows time for a relationship to build up with the customer and will often generate additional sales.
2. Offer your customers incentives to make repeat purchases, for example a loyalty scheme or a discount when they introduce a friend who makes a purchase.
3. Try cross-selling, for example if you run a shop selling cameras you could consider running a photography course to generate additional income and increase customer loyalty.
4. Make your business as visible as possible using your website, blogs and social media. Try and establish new connections and link up with complementary businesses in order to share marketing tools. Measure all your marketing efforts by using special offer codes to see which ones are the most cost effective.
5. Train up everyone involved in the business as a salesperson, share your goals with them and reward them when they go above and beyond to promote the company or suggest a brilliant cost saving idea. 

If you need help monitoring your costs or want clearer information from your accounts so you can feel confident about making price increase then please get in touch to find out how I can help.