To survive in small business you need to be making a profit. To thrive in small business you need to be making an even greater profit.
There are essentially two ways to increase your small business profits:
- Make more money
- Spend less money
Even making slight adjustments in many different areas of your business can create a positive change to your overall profit. All those small changes, increasing what you make and decreasing what you spend, does all add up.
“Beware of little expenses; a small leak will sink a great ship.” – Benjamin Franklin
Here are 15 ways to increase your small business profits:
1. Reduce your business expenses
Take a close look at all your business expenses to see what you can reduce. There may even be some non-essential expenses you can eliminate entirely.
2. Decrease stock
Don’t keep excess stock on hand, stock control will help you streamline your business and reduce your expenses.
3. Don’t undercharge
Look closely at how much it costs to provide your products and services, your pricing needs to cover your costs as well as make a profit.
4. Raise your prices
You are better off raising your prices over time rather than introducing a sudden large price increase, you don’t want to put off your current customers.
5. Confirm appointments
If you have a service business, confirm the appointment beforehand to ensure the customer will attend, this way your time is not wasted on no shows.
6. Make buying easy
Make the process of buying from you as easy and simple as possible. You might like to also give your customers a selection of payment options.
7. Cross-sell and upsell
Look for ways you could offer other complimentary products or services to your customers (cross-sell) or offer them a higher priced option (upsell), when they are purchasing from you.
8. Bundle products/services
Bundling combines some of your stand-alone products or services into a package deal for a discounted price. Bundling is attractive to customers as it creates greater value, while your business benefits from a higher profit per sale.
9. Develop new offerings
Survey your customers to find out what other products and/or services they would like that you could develop and sell.
10. Focus on your profitable offerings
Identify your most profitable products and services and focus on getting more sales for these offerings.
11. Eliminate underperforming products and services
Identify any underperforming or unprofitable products and services and get rid of them. This will also eliminate associated expenses.
12. Review supplier prices
While you can’t control the prices suppliers charges, be sure to review their prices regularly and don’t be afraid to change suppliers. You want to get the best price you can so you can make more profit per sale.
13. Negotiate with suppliers
Negotiate with your suppliers for better prices or discounts for buying in bulk.
14. Remove marketing activities with minimal results
While marketing is essential, if you’re getting minimal results from a marketing activity then don’t continue with it and try something else. Marketing and promotion can be quite costly small business activities.
15. Regularly review your finances
It is important to regularly review and analyse your financial statements to help you determine what is working for your small business and what is not.