As a business owner I’m sure you’re always looking for ways to make more money and in particular profit. One recognised and basic way to do this is of course to focus on increasing your sales and decreasing your costs as what you’re left with is profit.
Sales – Expenses = Profit
A more comprehensive way to review your business and make more money is by using the Five Ways System that I’m about to share with you
1. Concentrate on selling those products/services that bring you the highest margins/profit.
Instead of discounting to increase sales (and reduce profit), consider increasing your prices. Whilst you might reduce the total number of sales you generate; you will increase your profits by selling fewer items at a higher price. Another strategy that can help you here is to promote those products and services where your margin is the highest. If you have fast-moving stock of an item that has a low-cost price that has a good profit margin for you it makes sense to focus on increasing sales of it. Similarly, if you offer training and have a series of online courses then focusing your efforts on selling these is going to increase your profit. You’ve already put the effort or expense into creating them and now you can sell them over and over to an ever-changing audience.
2. Service your best customers and remember to up/cross-sell to them.
Do your customers know everything you sell? Most businesses have a core group of customers from where the vast majority of their revenue comes. It’s worth looking at these in some detail and working out which ones really are bringing added benefit to your business. Which ones have referred business to you in the last 12 months? Which ones have purchased additional services from you? Which ones are consistently telling the people they work with about the great things you’re doing for them? These customers are extremely valuable to you in terms of bringing you new leads and helping to spread the word of mouth about your business. Take some time and look at which services these customers are currently buying from you and what additional services they may be interested in. Once you’ve done this, contact them and tell them about how else you can help. You’d be surprised by the number of conversions clients of mine have got simply by telling an existing customer about another service they offer.
3. Increase your lead conversion rate.
Ultimately you want to turn your leads into customers. If you’ve managed to increase the number of your leads coming into your sales pipeline your next challenge is to convert them. Say you ran a Facebook advertising campaign that generated 400 new leads to your business if you then managed to convert 100 of them your conversion rate would be 25%. It can probably be better, so review your processes.
4. Having good systems and processes.
To be successful every business needs to have good systems and processes in place. If you want to grow and increase your profits it’s particularly important that your team understands your sales processes so that they know what they need to do when a lead comes in and how they can help you to make that all-important sale.
5. Focus on generating more leads for your business.
This comes down to your marketing. The more people you can tell about your business the greater the number of potential leads you’ll have. Getting the word out takes planning and it’s important to look carefully at the resources you have and the tools you have to enable you to do this. Depending on your business you might consider using flyers and leaflets, social media, online advertising, blog posts and/or PR campaigns. It’s important to make sure you have clearly defined goals for your marketing and measure the results you get. For example, you might be an estate agent with a client who has set their sights on owning a property in a Northamptonshire village. Leafletting the villages in your client’s target area could generate a potential property you can sell to your client. Your results would be measured by the number of enquiries you had from potential vendors wanting you to value their property.
Combining some of what has been discussed above, the following example shows what impact a 10% increase can make:
By knowing and understanding the numbers in your business and implementing the 5 Ways I’ve outlined above you’ll be able to considerably improve your bottom line. You’ll also find that there are a host of strategies you can implement to increase your profit.
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