Every small business owner would like to boost their profits, but it’s easier said than done. In fact, research by SmallBizTrends found that only 40% of small businesses are actually profitable. However, by changing your practices, you can increase your margins to ensure that your business not only stays afloat, but has the means to grow and thrive. Let’s take a look at six ways you can boost profitability.
1. Content Marketing
Content marketing is a relatively low-cost way of ensuring that your business stays visible. By consistently publishing blog posts, videos and social media updates, your ideal customers are much more likely to happen across your small business. Furthermore, you’ll stay at the forefront of their minds so that they are more likely to come to you when they’re ready to buy.
Of course, simply being visible isn’t enough. Content marketing allows you to demonstrate your expertise and help your clients solve their problems so that they see you as the go-to provider for your particular product or service.
2. Create a Stable Cash Flow
Cash flow is separate from profit, but it is still incredibly important to the financial health of your business. Positive cash flow enables you to grow your business and gives you the freedom to reinvest your capital, thereby generating greater profits.
One way to improve your cash flow is to offer retainer contracts to your clients at a discounted hourly rate. This may seem counter-productive, but by doing this you are securing work for the long-term and strengthening client relationships, which is likely to lead to additional work in the future.
3. Consider Outsourcing
In order to increase profits, you need to cut costs. Whilst hiring new team members may not seem like the obvious solution, it’s important to consider the financial value of your own time. Consider how much certain tasks within your business are worth; if your time is worth $100 per hour, can you afford to waste several hours per day on $10 tasks? Outsourcing frees up your time and allows you to focus on the high value tasks that require your specific expertise.
Another effective way to boost your profits is to introduce new products or services that complement your current offerings. A classic example of cross-selling is when a fast food worker asks you if you’d like fries alongside your burger. Other examples include a fashion boutique highlighting accessories to “complete the look” or a smartphone store offering protective cases for your new device.
5. Shop Around with Suppliers
If you’ve been using the same suppliers for several years, you’re probably not getting the best deal possible. Suppliers don’t reward customer loyalty, so shop around and see if you can find a lower price elsewhere. Besides, threatening to leave your current supplier often encourages them to be much more forthcoming with discounts and special offers.
6. Remove Dead Weight
Are all of your products and services really generating a profit? In order to boost your margins, you need to analyse your current offerings and work out which ones generate the most profit. You may be surprised to learn that some of your products or services don’t generate much profit at all. You can then cut them out and focus solely on the practices that really do make you money.
Boosting your profits doesn’t just happen; it requires time and consistent action. By focusing on marketing, outsourcing lower value tasks and getting rid of products and services that don’t make you money, you will see a big increase in your margins. Furthermore, it’s important to maintain a healthy cash flow so that you have capital available to reinvest in profit-generating activities and shop around with suppliers to keep your costs low.