10 ways to increase your profitability

Many business owners work hard, very hard, just to break even or stay afloat. Each of us deserves a reward for our efforts, whether financial or personal. The question to ask yourself is whether you are directing your effort in the right places to get the reward you want.

Of the businesses I have seen and worked in, there are many ways to waste effort, that is, work hard, but on the wrong things. Here are ten of the most common areas where the return on your efforts can really increase.

1. Inconsistent Marketing

Once you have committed to owning and running a business, you must equally commit to marketing and selling the products and services of that business. It is difficult, if not impossible, to sustain and remain profitable without an ongoing concerted marketing commitment.

To get the most out of your marketing, create a simple marketing plan that includes marketing activities every day, every week, and every month. Marketing plans combine formal activities (such as advertising, promotions, and writing) with informal activities (such as making new contacts). Don’t underestimate the power of talking to people about what you do. Use every opportunity, every time.

2. Fear of asking for the sale

Isn’t it true that we think that asking directly about someone’s business means appearing aggressive or obnoxious? But if we have this attitude, we are missing out on profit opportunities. Worrying more about what someone thinks of you than about bringing more money to the business is a very common mistake. If you find it difficult to “ask for the sale”, you can be sure that you are not making as much money as you could be.

The most effective way to tackle this problem is to practice asking for the sale in a language you’re comfortable with (not too bland, please). Write down what you want to say first, then practice it over and over again. There’s also a lot of stuff out there about handling objections. Prepare your responses to the most common objections so that you are well armed before speaking with your prospects.

3. Get help

Most business owners have strengths in one or two specific areas, but whether by necessity or by design, they often end up working in areas where they are not strong. This creates inefficiencies and the potential for errors in the business. To compound the problem, we don’t immediately ask for help, instead struggling to do the things we’re not trained to do (saves money, right?) But every day you spend with your business running at less than maximum efficiency means dollars lost out of pocket.

Find out where you add the most and least value in your business. Pay someone to help you with these low-value-added activities. Your time is best spent where it adds the most value. If you can do more of this type of activity, your business will benefit.

4. Use your existing customer base

All the research tells us that it’s easier and cheaper to keep working with the customers you already have than it is to attract new customers to your business. If you don’t regularly follow up on past customers, you’re reducing your potential for profitability.

Develop strategies to keep your customers with you, such as loyalty plans, regular communications and special offers. Have a regular process in place to follow up with your customers after they buy from you.

5. Expense management

Savvy business owners regularly assess their business expenses and find ways to cut costs without sacrificing quality. If you haven’t completed a cost analysis lately, you may be paying more than necessary, which will reduce your profitability.

At least once a quarter, you should review your expenses and negotiate any necessary adjustments. Sort everything you spend under 3 headings: Essential, Nice to have, and Non-essential. Everything in the last two categories is at stake – be ruthless!

6. Spending huge amounts on shiny, fancy marketing materials and expecting the business to flow without any extra effort.

Glossy brochures and clever marketing materials are a welcome addition to more active forms of marketing, like meeting people, calling people, and talking to people. However, brochures and business cards, as nice as they are, are not a substitute for direct contact. If you’re spending money on flashy marketing materials instead of direct marketing, your profitability will suffer. The most effective form of marketing comes from talking about your business with others.

Marketing materials are an expense, and to make sure they work, you need to monitor your return on investment. At the very least, you should keep track of where new business is coming from so that you can get an idea of ​​whether your marketing materials are contributing to any new business you get.

7. Spending a significant amount of time on underperforming activities

We don’t all know about this one! If you spend most of your day completing tasks that are administrative in nature and/or can easily be completed by other people, then you’re not getting the most out of it. For most of us, the best value-added activity we can engage in is bringing business in the door by building relationships, talking to potential customers, and promoting our business.

What value do you place on your time? Assign a competitive hourly rate for the market and industry in which you work; it can be $100 an hour or more. Then ask yourself if you would pay someone that hourly rate to process accounts or do administrative work. If the answer is no, find a way to perform these underperforming activities for a lower hourly rate. Hire an accountant or assistant for a few hours a week and spend their time doing the valuable work.

8. Not charging enough for what you do.

This challenge seems to arise especially for people who sell services. Either we feel embarrassed to ask for the amount we want, or we just take less money than we need, so we get “some money” instead of “no money.” But beware, after a while, working for too little can leave you exhausted and resentful, not to mention the impact it has on your bottom line.

You also don’t need to advocate for an increase in your fees. It is normal business strategy to review fee structures, make changes and advise clients. And contrary to our fears, it is often the case that trading levels improve after tariffs increase. It seems like we attract a whole different class of customers when our rates reflect the value we provide.

9. Not making enough use of technology that could save time and effort.

As a business owner, you have a set amount of time and energy within which you must maximize your profits. Technology can help you do this in the form of automatic responses, voice mail, wireless Internet connections, voice recognition software, SMS from your computer, etc. All of these tools are widely available to us and are designed to save time and effort. Each of us needs to continually look for ways to make business processes more efficient through the use of inexpensive technology.

Often the problem is that we don’t know what we don’t know. Some wonderful tool may be available but we don’t know it exists. You should keep up with the latest products by regularly checking business and telecommunications sites.

10. Sticking to outdated business models or plans.

You’ve all heard it before: doing things the way they’ve always been done means you’ll get the results you’ve always gotten. If you are not satisfied with your results, you need to re-analyze what and how you are doing things. An astute entrepreneur has a mindset that always challenges the way things are done in business.

Another great way to find new ideas is to attend seminars and conferences on various topics. If you get just one idea to implement in your business, then that seminar has been worth it.

If you’re serious about improving the profitability of your business (and aren’t we all?), taking action in these areas will help you make more money and have more fun in your business. And that’s what it’s really about.