Profits are the thing that keeps small business owners up at night. Sales might be increasing, positive reviews may be landing online, but if your business isn’t profitable then it could be game-over. No two businesses are the same, but whatever type of company you run, there are some key areas of focus for making your small business more profitable.
Read on for 4 essential tips from insolvency experts on increasing a small business’ profitability.
1. The customer must come first
Customers are the lifeblood of any business. Without an engaged and loyal customer base, making your small business more profitable is going to be an uphill battle. A recent survey conducted by American Express revealed one in three Americans are ready to switch companies after only a single incidence of poor customer service.
Indeed, it’s well known that several positive customer experiences are needed to make up for a negative one (as becomes clear when you start browsing online reviews).
2. The best course of action is to go back to basics
Review your current customer service and sales funnel activities. Is your small business providing a superior service to that of your competitors? Now might be the time to invest in additional staff training, or simply to make new commitments e.g. responding to emails or voicemails within a set time period.
In a world increasingly dominated by all things digital (and we’ll touch on this later), it’s easy to forget about word-of-mouth marketing and the benefit it can have on your bottom line. Whether your business is part of a small community or in a city, a verbal recommendation from friends and acquaintances can have a huge impact in gaining genuine interest for your business.
And how do you get positive word-of-mouth?
- By providing a good, professional service
- Building and monitoring your local reputation
- Finally, by gaining publicity by giving back to your community through supporting local organisations and charities.
3. Marketing: Be digitally-savvy – and creative
If your business isn’t online – it really needs to be. Setting up a website is both quick and affordable nowadays. Even if you’re not using it as an e-commerce platform, a brochure website will give you the opportunity to explain your services in more detail and sign-post users to your physical address. Of course, you need potential customers to be able to find your website. A cost-effective way of doing this is to harness social media.
Check out the following links:
- The average American spends 24 hours a week online.
- More than half of consumers in the States make several online purchases a month.
Leverage the huge and varied audiences across Facebook, Instagram and LinkedIn to share engaging content and show off your business’ brand, voice and style Building a social media presence does take work – but by creating a social content calendar where you schedule posts in advance, you can really take the strain off yourself.
4. Make the most of online advertising and strategy
To give your social media channels a real shot in the arm, try some social advertising. All major social platforms offer easy-to-run advertising solutions with detailed targeting options – meaning your hard-earned cash isn’t wasted reaching users who don’t have an affinity or interest in your business area. A social outreach isn’t everything, however.
In 2019, you also need a multi-channel digital marketing strategy. How’s your Customer Relationship Management (CRM) database looking? If you aren’t collecting email addresses from customers, you really should be. Not only can emails be used to make bespoke targeting segments on social media, email marketing is an affordable way to share special offers and relevant content with your customers and connections. With easy-to-use tools such as MailChimp and Moosend on the market, why not run a test campaign?
Business planning and pricing strategy
Hopefully, you already have a business plan. However, whether you do or not – if profits aren’t increasing, now is the time to review it. Don’t undersell your products and services to drive a high-volume. Precise pricing attracts the right buyers who are willing to pay for quality. Certainly, you shouldn’t be discounting products on a whim or because of a gut feeling – this behaviour will minimise gross margin over time.
The primary purpose of a business plan is to help articulate a strategy for starting your business though a successful one will also provide an insight on:
- Steps your business should be looking to take
- Resources required for achieving your business goals
- A timeline of anticipated results
If you want to make your small business more profitable, it’s important to regularly review your business plan and ensure that all potential increases in efficiency are considered. It’s also worth periodically assessing your pricing strategy. Be sure to evaluate all your hard and soft costs in your pricing model.
Making your small business more profitable
In this article we have explained four areas of focus for making your small business more profitable. If you apply yourself to each area your business will see benefits. For more small business tips on customer service, marketing and finance, take a look at some or our other articles.