10 Ways to Maximize Profits in Your Business
One of the biggest priorities for any business is to maximize profits. The more profit you generate, the more investments you can make to grow your business, and the more financially secure you will become in the long-term.
Activities to maximize profits fall into two groups, either cutting costs or generating more revenue.
Here are ten activities to maximize profit:
1. Renegotiate Costs
Whether you have high leases, equipment costs, loan repayments or supply costs – there is still a possibility of negotiating lower rates. If you’ve been in business for a long time, your credit score could have improved, and this can lead to better interest rates or credit from supplies. Your business’ suppliers will also likely be open to preferential prices to retain your business.
2. Cut Services You Don’t Need
Review your current services and see if you have bought a service that you no longer need. Be sure to cut these services as quickly as possible. If you are stuck in a contract with your current provider, but they aren’t offering you value, see if it’s cheaper to pay an early-release charge, or whether the contract could be mutually terminated because they’ve neglected part of the contract.
3. Motivate Staff
This is a cost effect strategy to increase your staff’s value to the organisation. Happy staff are more productive and deliver better quality work, which will increase the amount of chargeable output your business can achieve. Motivated staff also offer better customer service, which can mean fewer costly complaints against your business.
4. Hire The Right Staff
Recruitment can be an expensive process. Not only do you have the cost of the employee, but you might also have the costs of the recruitment process, lost productivity, and training. Unfortunately, not all recruitment is plain sailing. Sometimes organisations hire the wrong person, either they leave the company early, they lower staff morale and/or they affect the business’ productivity.
You need to set a process in place where you increase the chance of you hiring the right person. For one thing, hire people who have the same values as your organisation’s culture and don’t prioritise skills as these can be taught.
5. Increase Prices
Since you started your business, you’ve probably seen an increase in prices from suppliers. If you haven’t increased your prices, then your margins will be squeezed, and you will make less profit. Therefore, every so often you need to think about raising your prices.
While you might think that most clients will leave your services; the majority will probably expect that prices will rise at some point. In addition, it can cost them more to find a new supplier, than to stick with you.
6. Upsell To Current Customers
It is far easier, and cheaper, to sell to current or past customers than it is to sell to new customers. Look at your current customers and see what additional services you can offer. These should be complimentary to their current orders or perhaps an upgrade of their current order.
You should also be in regular contact with your current customers; make sure you are offering them great, relevant customer service. The more satisfied a customer is with your treatment of them, the more they will trust you and the greater their purchase value will be.
7. Employ Cart Abandonment Software
One of the biggest losses for your business will be those who abandon their carts with products in them. Research has found that as many as 87% of all customers will abandon their cart. Numerous reasons are behind cart abandonment, including:
• An interruption to the buying process that distracts them.
• Sudden inclusion of delivery charges.
• They don’t want to use the current payment options.
• Poor website design.
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8. Analyse Your Customer Acquisition Costs
Your customer acquisition costs can be the difference between your business’ success or its failure. Look at how long it takes to bring in a new client and whether that value is equal to the customer lifetime value.
The lifetime value should be significantly higher than the cost of acquiring customers. However, it is important to remember that it can be tough to be accurate with your acquisition costs completely. Sometimes social media and website visits can play a significant part in converting a customer in the long-term, but those interactions aren’t recorded.
Productivity is the key to gaining more revenue from your time. Most people think working longer hours will automatically mean they will be more productive and surveys have found that one-third of workers eat lunch at their desks while half think they’ll work during vacations.
Yet this is the wrong approach. Spending more time relaxing and sleeping can be the catalyst for greater productivity. In a study of 400 employees, researchers discovered that those who slept less than six hours, were more likely to ‘burn-out’ on the job.
A different study by Harvard estimated that $63.2 billion a year is lost in productivity because of employees suffering from sleep deprivation.
In contrast, Stanford research Cheri D. Mah, found basketball players’ performance drastically improved when they got more than 10 hours’ sleep. So, encourage your staff, and yourself, to get more downtime.
10. Create Affiliations
There are three ways you can use affiliations to increase your exposure to prospects and sell more.
Firstly, you can speak to current customers and ask them to recommend you to their family, friends, and customers. If they like your service, then it is likely that their network will also find your services useful. You can offer a reward, such as a discount on their next invoice to encourage referrals.
Another option is to reach out to affiliate marketers who create content for their own sites to drive traffic to your site in exchange for a commission. These can be very rewarding as the main effort of these people is to sell other people’s goods and services.
The final option is to reach out to businesses who offer complimentary goods and ask them to promote you; you can promote them in exchange.
Make Your Business A Success
If you want to make your business a true success you will need to maximize revenue and minimize costs. There are various strategies to achieving this that cover productivity, business operations, marketing, and customer relationships. Get the right mix and your business can grow from strength to strength.