Also, when you give customers exactly what they want, they become your biggest business advocates. A guarantee should be included to determine if the customer found the value of your product or service to be worth its cost. This gives your customer the opportunity to reply honestly, which allows you to look closely at your products and services to determine their true worth. Strategic alliances are the perfect opportunities to expose your business to new markets. It definitely makes sense to partner with those whose businesses complement your own business. Cross promotion will work very well in such cases because the products and services match up so well.
You want to work with firms that have these vast experiences so that no financial situation is too challenging for them to service. Deliberately increase your prices to see how your customers react. If no changes in demand occurs, slowly increase the prices until demand levels off. Along with demand, the cash you generate declines, then set your prices back. If demand falls, but your cash generation increases, stay at the new price to keep your new profitability. Assets that are not actively being used, sitting around costing money, rather than generating money need to be sold for cash. It makes no sense to hold on to assets that have become expenses.
You can use the cash made to reinvest into your business to increase its profitability. Inventory that is sitting around for months and not being sold is costing you maintenance fees. Develop the relationships with your vendors that allow you to receive product and pay them once that product is sold. You will want to review your bank statements in order to determine your spending habits, and see where you can improve. If you are spending more money than you are bring in, this is a habit that quickly needs to be reversed.
5 Ways to Grow Your Profits
Little expenses that happen throughout the day quickly add up to be big expenses over time. Your bank loan can be a burden that does more harm than good after it is received. If your loan repayment is eating away at your profits, ask your bank if you can get new terms that allow your business to actually make money. When you are paying big money for a particular service, you will want to be sure that you are receiving the best price. Let your potential vendors know you are comparing prices, and would like to determine who provides the best value for their prices.
This will help you find the best vendor before being locked into a contract that you have to wait years to get out of. Start contacting your customers to determine when they will be paying their invoices. Communicate the length of time they have to make these payments, and get them to agree to a time when this payment will be made. Do not let them go until they agree to make their payment by a scheduled date. Just because you have a new customer, it does not mean that they are a good customer.
You need to determine their creditworthiness so that you do not end up dealing with a customer who has issues making payments for the services rendered. Your key people need to be involved in ensuring that payments are received for products and services sold. You do not have time to handle these things yourself as a business owner, so you need your key people to take responsibility for these tasks. Part-time workers cost less to employ than full-time workers. Take advantage of this luxury by hiring multiple part-time workers.
Be warned that these people will be the first to leave your company if they are presented with a full-time opportunity. Insurance is expensive to maintain, so you want to be sure you are dealing with insurers who are providing you with the best options. If you feel like you are paying too much for the service you are receiving, do not hesitate to switch providers. You can not allow a business atmosphere of complacency. This leads to a business that operates poorly and get overtaken by its competitors. You should promote excellence throughout your business, from the front desk to the key executives.
When you do not implement a set of expectations, your team has no guidelines to follow. You need to let it be known how many sales calls need to be made daily. Communicate the sales quotas for the week, month, and quarter. Train them how to effectively communicate with prospects and existing customers. Sales are the single most important activity in which a company can engage. They allow companies to hire people, buy equipment, and manufacture products or deliver services. Without sales, there is no future for a business.
The poor economy in recent years has hit small businesses particularly hard. However, your decision to implement any of them should be based upon several factors:. While each of the strategies can be implemented alone, you can implement several of them simultaneously for greater impact on revenues. Augment your existing client base with new products, new geographic territories, and additional sales resources:.
Add Complementary Services to Existing Products Adding complementary services or products may help you gain new clients, as well as maintain existing ones. For example, a lawn-mowing or landscaping company might add swimming pool maintenance for little additional cost. Neither service is technically complex or difficult to deliver, both require regular home visits, and each are a burden to the homeowner.
Increase Your Marketing
Similarly, a home repair company can easily serve the commercial market with the same crews and equipment used in its normal residential business. Contracts to provide future maintenance or extended warranties can be sold with almost all capital equipment. Review the products of your competitors for ideas. Extend the Geographic Market Area Many small businesses limit their marketing and sales efforts to the immediate area surrounding the central location of their business. A Dallas distributor of playground equipment discovered that none of his competitors marketed in several of the suburbs surrounding the city, probably because no distributor was located within those communities.
The additional cost to cover the larger market was minimal and more than doubled potential sales. Enter Into Cooperative Sales Agreements Contact companies that sell a complementary product or service with a request to sell your products also. For example, computer hardware companies often sell software, which facilitates the sale of their hardware. Furthermore, pet food distributors offer proprietary vitamins and pet furniture, and home remodeling businesses also sell landscaping. Many companies actively seek complementary products as they add very little to marketing and sales expenses — it is just a matter of finding the right partner.
Adding additional salespeople for no out-of-pocket cost is a sure sales booster. Price is the single most important factor in a decision to purchase a product or service. Before implementing any pricing strategy, know how your customers feel about your product so that a change in price encourages the market behavior you want. Raise or Lower Prices The prices of products constantly change, so you should not be reluctant to adjust your prices to meet your objectives or the market situation.
A price reduction will stimulate more sales and take market share away from other suppliers.
If the reaction is not positive, you can make further adjustments, including a return to the old prices. You may also consider regularly raising your prices. Consumers rarely react to slight price increases and often overlook them. While a small increase in price may not seem significant when compared to the full price, the impact of the increase on profits is magnified since the increase will flow directly to the bottom line.
The shoes were intended for the mass market and priced to attract women who wanted a nice look without the cost of a designer label. The store also offered handbags and hats designed to complement each pair of shoes. The result: More than one-half of the shoe sales were bundled with a higher overall profit margin. If you sell products that naturally go together, or are used for the same task or at the same times, consider selling them as a package.
Add, Reduce, or Eliminate Shipping and Handling Charges In lieu of raising the price of a product, consider adding a shipping and handling charge. The net effect on revenues is the same while avoiding buyer backlash to a price increase. If you currently charge for shipping and handling, consider reducing or eliminating the charge for a specific time frame in order to stimulate sales.
Offer a Rebate A rebate is a deferred discount, issuing a percentage of the price in cash after the product is purchased. Popular with consumers, they are often associated with the sale of new cars. This means that the publicized discount can be effective in generating additional sales while the lower redemption rate reduces its cost. On the negative side, failure to promptly redeem a rebate can cause bad customer relations.
- 15 Surefire Ways to Increase Revenue in Your Business!
- 15 Surefire Ways to Increase Revenue in Your Business.
- A Pure Thrill (5 Suspense Books in 1).
Because of growing complaints, some companies have discontinued rebate programs. Run ads and promotions in limited locations and check the results before spending your entire budget. Incorporate some way to monitor marketing communications, such as using coupons, electronic codes or website traffic statistics. If your product or service is price sensitive, pay special attention to your pricing strategies.
Find out what your competition is charging and raise or lower your prices based on your goals. Lowering your prices can increase revenues to make up for lower margins. Raising your prices can create a higher perceived value in the minds of consumers and increase your margins.
6 Ways to Increase Profits for a Small Business
Raising your prices can also increase your revenues without increasing sales. Changing where you sell your product can significantly boost your sales and revenues without requiring any changes to your marketing or pricing. Perform a careful study of the effects of using online selling, direct mail, wholesalers, retailers, distributors and outside sales reps to project how each method can affect your sales volumes, profit margins and total profits.
In some cases, new distribution channels require marketing support.