Strategies to Increase Profit in YOUR Business
At the Sensible Business Owner, we are all about increasing profit! But what does that mean exactly?
Increasing profit can happen in many ways. Such as by reducing expenses, reducing taxes, increasing your customer base, and having multiple types of revenue streams in your business.
1. Reduce Expenses
Reducing expenses is a beneficial strategy because let’s face it, cash truly is king. If you didn’t realize that prior to March 2020, I bet you do now!
One way to do this is to review your monthly, quarterly, and annual expenses and look for items you no longer need. Such as a recurring subscription you forgot you even had. Software is a big culprit here. You might have subscriptions to software that you no longer need. Advertising is another big one. If you are doing ads on a social media platform and aren’t making a return on your investment, it’s probably time to stop throwing money away. You may look to hire someone with experience in ads or look at your offer and see if it needs to be tweaked.
Just because we are business owners doesn’t mean we are experts in all aspects of running a business. Right?
If that last sentence got you, it’s time to step back and give yourself some grace. If you need help, don’t be afraid to ask. I have had new clients tell me that they waited so long to ask for help because they were embarrassed that they needed help. And guess what? It cost a lot more than it would have otherwise. Find someone who specializes in your area of weakness so you can move forward and stop wasting money trying to figure it out on your own.
Are you going to review your expenses to put more money back in your pocket?
2. Reduce Taxes
Reducing taxes might sound daunting but it’s not as hard as you might think! I am not talking about complicated tax strategies here.
Perhaps the top two ways for small business owners to reduce taxes is:
1. Know what expenses are deductible and how they affect your tax return.
2. AND make sure you are capturing all your expenses. Don’t lose out on deductions due to sloppy record-keeping. You need some kind of system for tracking. It doesn’t matter if it’s manual or electronic. Just pick a system and keep it updated. Don’t get lost in the minutiae. There is enough to deal with as an entrepreneur. This is one of the most important tasks but should take the least amount of time.
And if you are putting it off, stop now. It takes more headspace to continue to put off something you know you should be doing than to just do it. I know from experience.
3. Increase Customer Base
Increasing your customer base can happen in different ways.
- Acquiring new customers
- Selling additional products or services to current & past clients
It’s the second one that many don’t think about. If you sell a service, you might have clients that are in your basic package. Are there other services that could benefit them? Maybe their business has grown or even changed, and they might not even know about your other services. Also, think about past clients. If someone bought a logo from you, they might be ready for website design. They have already developed the know, like, and trust with you. So, follow up in a non-spammy way.
If you sell a product, are there additional products that would benefit the customer? Or what could you do to get the customer to come back again and again? You’ve already done the hard work of acquiring them.
Also, follow-up is so important. If someone reached out to you and then never bought it’s worth reaching out again to check on them. People get busy, so don’t take it personally. I have closed many sales this way with our advisory clients. And they always thank me for following up. Many business owners have a hard time getting out of working in their business and don’t make time to work on their business. Your follow-up might be the push they need.
Because fortune really can be in the follow-up!
Of course, there are other ways to increase your customer base, but these tend to be the most overlooked.
4. Different revenue streams:
Having different types of revenue streams in one business can at times require creative thinking. Different revenue streams can come in many forms. Such as one-to-one, one-to-many, done-for-you work, digital products, and physical products such as a book.
If you only offer one-to-one work, can you take the system you are already using and create a one-to-many offering?
Do you have proven strategies that you can use to create a DIY product? This is perfect for a service-based business. Usually, the person that purchases a DIY offer is not someone that will purchase your full-service offer. And the price point is typically substantially lower which helps to lower the barrier to entry. Acquiring customers that you wouldn’t have otherwise.
For instance, a marketing firm that specializes in social media could have one-to-one customers, and a program teaching others their strategy in a one-to-many model. They could also sell digital products such as a course on a social media platform or offer a low-ticket strategy guide for those DIYers.
All of these suggestions would increase profit and allow you to serve a wider audience. And some of them are one and done! The strategy guide was created once and can be sold repeatedly. You will need to update it as strategies change but for the most part, you can sell it every day and not have to think about it. The same rings true for a course.
Another great result of a low-ticket offer is that it can help build the know, like, and trust factor for customers who aren’t willing to pay hundreds or thousands of dollars to a stranger. I wouldn’t build an entire business around low-ticket offers, but they can be a component of your sales strategy.
The article is for informational purposes only and should not be construed as business, accounting, tax, or legal advice. Details are subject to change without notice.