For some small business owners, it can be a joy to simply turn a profit. If you’re doing so, you’re likely keeping a close eye on your finances and ensuring that your accounting and bookkeeping is managed properly. If you’re not yet profitable, then you may just be a few steps away from achieving this goal without even knowing it. Taking a look at your business and financial management strategies can help you improve your profits. It may just require a few tweaks.
Improve your sales or decrease operating costs
On its surface, the strategy for turning a profit is simple: Bring in more revenue than you spend. So, if you’re going to improve your profits, you need to sell more of your product or service, or spend less money running your small business. Ideally, you should try to do both.
You can increase your company’s revenues by developing new product lines, expanding your customer base, raising prices, or enticing new customers by offering a discount.
If decreasing costs seems more feasible at this time, start by taking a close look at your operating costs. Examine how much are you spending on your utility bills, office supplies, equipment, vendors, marketing materials, etc. Consider the following ideas for reducing overhead:
- Reevaluate/renegotiate service contracts, equipment lease costs coming up for renewal, retainer fees, etc.
- Look for less expensive operational and financial products and services, such as cloud accounting software that may not have been available when you started the business.
- Assess staff costs and productivity.
- Hire an accountant to ensure that you are taking advantage of tax deductions.
- Consider renting a less expensive office space.
- Reevaluate insurance costs to ensure you’re getting the best rates.
You don’t just have to look at adding and subtracting costs to be profitable. You can also make adjustments to how you run your business.
For example, what tasks could you possibly automate? Automation makes tasks more efficient and accurate — which saves time and money because you don’t have to backtrack to correct mistakes. If you do decide to go in the automation direction, however, keep an eye on technology that will evolve with you and your business over time.
Speaking of efficiency, you can also improve profits by outsourcing work. It may seem odd to think about spending money in order to save it, but if you’re handling a lot of administrative work yourself, like collections or bookkeeping, that’s time away from working on income-producing activities. So think of outsourcing not so much as buying a service but as buying time. That time you purchased will be well worth the money because you can put it toward work that will earn your company more.
Another way to increase profitability is to ramp up your promotional efforts. These days, your advertising budget does not need to be as large as it once needed to be. You can leverage your social media accounts into free marketing campaigns; put promotional or create general awareness posts on your Facebook page or Twitter feeds, load sales videos on YouTube, or post relevant articles on LinkedIn.
Let your existing employees be your sales team. Don’t let titles get in the way; your staff can play a vital role in promoting your business whether they are officially “salespeople” or not.
Encourage them to get involved with the marketing of your business, whether it’s attending networking events, setting up business lunches with prospective clients, sending emails, making phone calls, or talking up the company in their day-to-day lives. You may be surprised at how receptive they are. After all, the more profitable your business is, the better off they will be.
Spending time and money on your business is a given. How efficiently and strategically you spent that time and money will determine how much you‘ll be able to increase your small business profits. Your odds of being more profitable will increase by using strategic methods like reducing overhead, smart marketing, and encouraging your staff to get involved.