Your profit is the lifeblood of your business. A lot is riding on how much profit you generate, and it determines your viability and whether your company will succeed or fail.
Your profit margin is what you have left after accounting for your expenses. Some of the typical business expenses are payroll, overhead, equipment, resources, etc. You should be set up for success if you have a sizeable profit margin.
Increasing your company's profitability is crucial, enabling your business to continue growing and being competitive in your industry. A rise in profits has the added benefit of your company obtaining funding from investors, financial institutions, and shareholders. All of this is essential to ensure your company's survival in a highly competitive marketplace.
As we are on the threshold of a new year, this is a good time to identify ways that you can increase your company's profits. After reading this article, you'll have confidence as you take actions designed to boost your profit margin next year.
Here are 7 Ways to Increase Your Profits in the New Year
1) Boost Your Operational Efficiency
If you want to boost your profits, consider ways to increase your operational efficiency. For example, you could reduce the number of meetings you hold. This way, you can dedicate this extra time to engaging in revenue-producing activities.
Another way to enhance operational efficiency is to interview various vendors in an effort to get better prices. You could also request lower pricing from your current vendors. Evaluate your company's spending on phone service or a merchant account provider.
Take a look at your inventory system. Is it manual and labor-intensive, or is it automated? You may be much better off investing in order management and inventory management software which could give you significant returns for your business. This is especially a money saver if you do substantial sales volume.
2) Focus on Repeat Sales
You will likely be able to increase your profits next year if you identify ways to improve repeat sales. One highly effective way of doing so is to regularly connect with your customers. Avoid increasing your marketing expenses to carry this out, and instead, utilize email or text messaging to increase your communications with your customers. You want to frequently reach out to your customers even if they already like your products or services. Doing so makes it much more likely they will become repeat customers and even evangelists for your brand.
Let your customers know about product updates, new product releases, or special promotions. This way, they will keep coming back to buy what you're selling. You should also consider launching discount specials and alerting your customers on how they will receive even more value with their purchases.
3) Publicize Your Higher-Margin Products
Determine the highest-margin products or services, aggressively promote them, and motivate customers to buy them. For example, suppose your recreational apparel – sweatshirts and hoodies, etc. – has the highest margin and is not as expensive as other clothing with a lower margin. In that case, you should publicize the recreational apparel. Keep in mind that the revenue generated may be the same or less, but you will boost your profits.
Meet with Your Business Partners, Clients, or Customers
Take advantage of Burbity meeting rooms for training, interviews, meetings, presentations, and more.
4) Strengthen Relationships with Your Customers
Cultivating and strengthening relationships with your customers is essential to growing your business. This enables your customers to feel connected with your brand. It also may increase customer retention and your repeat purchase rate.
Ultimately, you'll be able to build goodwill and increase the value of your business by bolstering ties with your buyers. Your customers are also much more likely to remain loyal to your company.
Rest assured that enduring relationships with customers will strengthen your bottom line. You may also see more revenue come in from referrals to your customers' families and friends.
5) Increase Your Prices
Your natural instinct may be to lower prices to remain competitive, especially during a downturn in the economy. You may think that you can boost profits by making up for the lower prices with higher volume. But decreasing your prices could have a major negative impact on your business profits. You might even need to attract new business to retain your current profit level.
Instead of reducing your prices, you should consider increasing them. Typically, a company can raise its prices by as much as 5 percent or even 10 percent and not experience market resistance. If you produce good quality products or services and you have exceptional customer service, a modest increase in your prices will not cause customers to leave your business.
With an increase in prices, you could lose some of your sales volume, but you realize a positive effect on your profit. In other words, you'll be making more money per sale, with less sales overall. You'll realize more revenue for less work.
6) Enhance Efficiency of Product or Service Creation
Try increasing your profits by lowering the cost of your company's sales. You simply implement systems designed to make your products or services more efficient. The result will be an increase in profits.
You accomplish this by decreasing your company's wasted time, material, and other costs. For example, you own a spa business and can only schedule appointments through the phone. You call the customer, determine a convenient time for them, and record this appointment in your notes. In a typical month, you will have wasted hours on the phone instead of providing your service to your clients.
However, if you put in place an online booking system on your website, you'll free up considerable time that you could devote to customer care. It is this type of added efficiency that will boost your profits.
7) Add New Related Products
You could unleash a financial gold mine and boost your profits simply by offering peripheral or related products that compliment your main product line. For example, if you own a salon, you can make a slew of hair-care products available for sale. If you run an auto mechanic shop, put up-for-sale products that will help cars run better.
In order to offer the right new products, keep track of items that your customers are requesting. Afterward, conduct market research to figure out how extensive the need is. Then determine how much profit a new product would bring in for your business.
These additional related products will provide your company with new revenue streams that are guaranteed to increase your profits!
Rent Our Private Offices at Burbity Workspaces
With Burbity Workspaces, you can enjoy the privacy of your own furnished office that includes a lockable office door, 24/7 access, and mail service.
At Burbity Workspaces, we offer offices, desks, and team suites so your business can thrive and reach its full potential. Take advantage of our convenient services and resources with our Spokane workspaces, which also offer a community to support and help you succeed.