Every business’s goal is to make a profit. And, of course, profitability is more important if you have employees who depend on you for yearly raises and vendors with inflation rates that increase yearly.
A result from a study shows that about 10% of small businesses with existing employees and 30% of those with no employees close down each year. Without a doubt, this is a scary statistic. And that’s why small businesses constantly look for ways to increase their profitability.
Indeed, increasing profitability is crucial to growing and maintaining a business, and there are numerous ways to do so for small businesses. If you want to increase your business’s overall sales and revenue, decrease expenses, or perhaps a bit of both, there are specific strategies you can follow to help you out. Plus, you are even luckier if you are reading this article now. This is because we will discuss some of these tips that can help to increase your profitability. Read on to discover more.
1. Reduce inefficient spending
If you want to increase profitability, reduce expenses. Take a look at all your spending and evaluate where you’re overspending. You could be paying for an expensive office space when you could operate a remote-based firm instead. Whatever the case is, make sure you figure it out.
If you’re presently hiring expensive contractors or perhaps want to cut labor costs, giving some responsibilities to an external company could also save your firm money.
2. Search for new creative ways to gain more customers
Usually, when business owners want to increase their profit, they first think of assessing internal processes like cutting staff costs or limiting budget.
Sometimes, they don’t need to do all that; instead, they need to be creative and look for new ways to get more customers.
3. Upsell to existing customers
Getting customers should be a primary focus, but don’t forget your existing client base.
If you offer different tax and small business accounting services, you’ll probably have clients who aren’t signed up for all of them. Section your client list into different services and approach them with an offer to sign up for any additional ones they don’t have. You can achieve this by simply emailing them to let them know there’s another service they may be interested in. You could even give a discount for being an existing customer.
4. Revisit your marketing strategy
Marketing is essential for any business looking to grow and profit, and although it is an expensive investment and commitment, it can pay good returns for your business. The goal of getting more clients lies in creating more awareness and exposure for your business, and to do this, you’ll have to arrange a specific and planned marketing strategy.
Focus on creating content, paid online advertising, social strategy, and search engine optimization. You could outsource this to a marketing agency or hire people to take responsibility. Whichever way, if marketing is currently not a priority on your business list, put it on going forward.
Improving your business profitability is a long-term, non-stop endeavor. It’s something that small and mid-sized businesses should regularly do. Make it part of your monthly reviews to ensure you’re constantly improving your business, reevaluating your services, and prioritizing profitability.
Book a free consultation or give our team a call. See if TW Accounting is the right fit for you and your small business accounting.