In the quest to get more customers and grow sales, many small businesses lose focus on something that is vitally important – Profit! Profit is your reward for excellence in entrepreneurship. So whether you are just getting started or well established, here are some ways to help you put more profit on the bottom line and in your wallet.
Be Different & Compelling
Too often small businesses do what everyone else is doing. They tell customers what they do and just compete on price. If you want to avoid this trap (and you should), start talking benefits not features.
Customers today have many choices, so give them a reason to choose you over others. What makes you and your business compelling and different? Now different doesn’t need to be unique to you and you alone. It simply needs to be something you do very well that you can promote or guarantee – at every opportunity in all your marketing! It’s easier than you think; but if you are not sure, start by asking your customers. When you stop competing on price, you’ll earn more and create profitable growth in your business.
Avoid Trying to Serve Everyone
Who are your ideal customers – those who value what you provide, at the level you provide it and at the price you charge? These are the customers who are happy to work with you, rave about you and often refer others. It shouldn’t be everyone.
Don’t spend a lot of time and energy trying to satisfy everyone or you end up serving few people well. It hurts your reputation and definitely impacts your profit. So nail down your ideal customers, learn more about their needs and build your business around them. What products or services do they need? What are some of the challenges they face? What level of service, payment options, and availability do they expect?
Once you are clear on this, attracting more of them is much easier – and profitable. So be willing to think smaller to grow bigger! You’ll not only make more money, but you will enjoy your customers a whole lot more.
Plan Your Growth
Build your reputation on your core products and services before you start jumping into new areas and new products. More is not always better. Stick with what you do well, build your reputation on it and only expand when you have the resources and ability to deliver what you promise and do it profitably. Don’t let unprofitable growth erode the profits in your small business.
Get the Right People To Grow
At some point, you may need to add people or replace someone who is leaving. Many small businesses are quick to hire and slow to fire. And it comes at a cost – profit and productivity. Before you rush out and hire or replace someone, stop and build a case for your decision. Here are a few things to consider.
- Do you need someone onsite or virtual?
- Can you use a sub-contractor or do you need an employee?
- Do you need someone full or part-time?
- Can you promote or expand the responsibilities for an existing employee to fill the need — instead of hiring?
- Can you restructure the company and job responsibilities (and eliminate redundancy) to avoid bringing in additional help?
Explore all your options, look at the costs and benefits associated with them, and then make the decision. Remember, people are an investment in your business. Whether you hire, use a sub-contractor or work with someone virtual, use a system – don’t just wing it.
Know the Numbers
You can’t manage what you don’t measure and what you measure you can improve. Successful owners of all sizes track and monitor what is important to them and their business. What numbers should you track to measure your progress and success? While they vary by business, some common measures include sales, gross profit margins, break even, number of leads, sales conversion rates, average sales dollar per customer and net profit.
Knowing where you are today can help you make better decisions and prioritize what needs to be improved. Do you know how much profit you make from each of your products or services? Or which customers are profitable? If you knew this information, would it change what you market and who you target? The answer is likely YES!
Learn to Love Systems
Finally, learn to love systems. Many small businesses have no documented procedures of how they do what they do. As a result, there is little consistency – a key to productivity, efficiency, customer satisfaction, and profitability. Many assume only big businesses need systems; and say things like, “We’re small, we talk to each other, and we all know what needs to be done”.
Maybe this is true when you first get started and it’s just you. But what happens when you grow and suddenly you are serving more people, or bringing in new staff? What happens when people leave and take the knowledge with them? If you want a business that provides consistent service with less effort and more profits, then make systems a priority in your business. For additional help with systems and procedures, check out my Ultimate Systems and Procedures Guide for Small Businesses.
So whether your business is well established or relatively new, you can make it a success if you focus on creating uniqueness and niche your business, plan your growth, know your numbers and always look for ways to systematize your business. The payoff will be there on the bottom line!
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