If you’re the founder of a small business, you’ve probably experienced your fair share of challenges—like being able to pay yourself after working around the clock 24/7. You pour your heart and soul into keeping the company afloat, but despite all your efforts, you realize that you don’t have much to show for it. In wake of the COVID-19 pandemic, your family might need this income more than ever.
Before you can take home a slice of the cake, your company has to reach the “break even” point in which the total costs equal the total revenue. Once you reach that threshold, the business is officially profitable—but why stop there? Go for green and increase profits at your small business with these five strategies.
What you can expect in this article:
1. Cut Costs Wherever You Can
The easiest way to shift your margins around is by reducing overhead costs to the best of your ability. There’s no expense too small or insignificant! Where you decide to “trim the fat” will depend on personal preference, but remember to keep the big picture in mind. For instance, you can easily swap out cheap office supplies, but how do you feel about replacing the in-house accountant on staff with an outsourced payroll solutions for small business?
These calls can be tough to make, but remember that at the end of the day, it’s simply a matter of business and nothing is personal. Automation is the way of the future, so if you can cut labor to increase profitability, then it might be in your interest to do so.
2. Get into the Minds of Consumers by Conducting Market Research
Whenever someone mentions the term “market research” many small business owners think that the process is too complex, or that it doesn’t really apply to their line of work, but that train of thought is born out of laziness!
Here’s a simple example: a business owner stocking up on items that are low in demand. Essentially, market research could have helped prevent the inevitable surplus of items sitting on the shelf by taking a temperature check of the economy.
Some startups fail because they skip this critical step in their inventory and production planning. Even when sales revues are high, you could use this tactic to expand the business by adding products and services for greater profitability.
3. Increase Order Sizes through Recommendations
Boost the size of customer orders by encouraging your employees to recommend a related item with each purchase. It may require some cross-training, but the effort could lead to huge payoffs. Think about it: for every five people who say no, there might be one who says yes.
Either way, customers will feel as though they’ve been given the full experience, encouraging them to come back for more. If your employees are reluctant to seem “pushy,” remind them of how frustrating it can be to get all the way home only to realize you’re missing a critical component. Something as simple as placing AA batteries next to the checkout station can add a few extra bucks here and there.
4. Prioritize Customer Relationship Management (CRM)
You’ve earned a sale. Now, how do you stay at the forefront of their mind so they’ll come back next time? Maintaining a strong customer retention rate, is pretty challenging without communication by email, but up-and-coming companies are also using automated text messaging to market special promotions.
The challenge, however, is to reach out in a timely manner. There’s no faster way to be sent to the spam folder than by blowing up their phone or email too often. Think about it: if it annoys you, it probably annoys them too.
CRM software helps you keep track of every interaction and automatically syncs it into a database—you can even keep track of leads you’ve not yet converted and send them appropriate messages to push them down the sales funnel. With these technologies in place, you can choose to send anniversary cards on the day of their first purchase, or a discount code on their birthday. They’ll appreciate the kind message and might be tempted to make a sale in good spirits.
5. Explore Different Marketing Channels
If you’ve been locked into paid advertisements on Facebook for quite some time, or you’ve been running the same radio commercial for years, it’s time to switch things up. There are endless marketing channels for you to explore and the only way you’re going to know what works best is through good, ol’ fashioned trial and error.
Keep an eye on those key performance indicators and may the profits be ever in your favor!