How to Make Profit in a Small Business
When you set up a small business, for the longest time it can feel like you’re working for little or no reward. You’re giving it all you’ve got, burning the midnight oil and pumping most of your money back into the business.
Finally, usually 2 or 3 years down the track, your small business start turning a profit. Hip hip hooray!
Nothing quite beats that feeling of seeing all your hard work pay off.
When you get to this stage of your business, you’ll want to find out how to maximise your profit margins.
Here are 5 important aspects to take into consideration when you’re grappling with how to make profit in a small business.
- Know Your Customers
- Creative Marketing
- Drive More Sales
- Raise Your Prices
- Cut Back on Expenses
Let’s go into a bit more detail on each of these solutions.
1. Know Your Customers
The better you know your customers, the better you are able to communicate with them and respond to their needs. If you have already built a healthy customer database, you’ll want to look into Master Data Management (MDM) software that integrates with your Customer Relationship Management (CRM) software.
Once you’ve had a long hard look at your Customer Analytics you can get to work on your marketing strategy.
2. Creative Marketing
Marketing a small business has changed hugely in the past decade. Whether your business is conducted online or offline, it’s virtually impossible to build a successful brand without online marketing.
If you’ve been hesitant to enter the world of digital marketing, social media marketing and influencer marketing, now is the time to change that.
Here’s a quick checklist of the basics you should have in place to show the world you mean business:
- A stunning company logo that reflects your brand.
- A professional website
- A Facebook business page
- A LinkedIn business page
If you’re planning to connect with Influencers, I also recommend you build:
- An Instagram Page
- A YouTube Channel
You don’t have to hire someone or create a department to handle your digital marketing at first. You can outsource this to experts or hire a Virtual Assistant who works part-time.
3. Drive More Sales
Once you get your positioning, branding and marketing right, you should find many of your sales coming in on autopilot.
Our top tip:
Turn your satisfied customers into your salesforce by employing them as affiliate marketers or influencer marketers.
Or at the very least get them to write some fab reviews for you and make sure you post them everywhere, on your website and all your social media platforms.
You’ll find more great tips on how to get more sales in our previous post.
4. Raise Your Prices
One of the quickest ways to improve your bottom line is simply to charge more for your products or services.
Proceed with caution. To avoid pricing yourself out of the market, follow these tips:
- Research what your competitors are charging for similar products or services and align your pricing with theirs.
- Increase your prices in small increments over time.
- Give your customers ample warning before you increase your rates. This is also an opportunity to communicate with your clients and give them a chance to stock up at the old price.
- Make sure that you offer further value (e.g. a new product or a free gift) or at least an explanation when you increase your prices.
- Consider giving loyal customers the old rate or discounted rates in exchange for referrals or reviews.
5. Cut Back on Expenses
The last logical place to ensure your profits start soaring is to reduce business expenses. Over time, expenses can creep into a business that aren’t always cost-effective.
Here are some tips to help you curb your expenditure:
- Shop around for the best deals on office supplies and raw materials
- Collaborate with suppliers and distributors
- Barter for products and services if you can
- Reduce your staff quotient and office space by outsourcing work
- Pay off business loans to save on interest
- Reduce vehicle expenses or shipping costs where possible
- Compare pricing for renting vs buying office equipment
- Unsubscribe from any paid service you’re not using
- Keep your Accounting and Tax up to date so you don’t get hit with penalties
And there you have it. Focus on these 5 fixes and you should see profits increasing and your business booming.
Where are you on your entrepreneurial journey? Are you starting to see your hard work paying off? Are healthy profits rolling into your bank account?
