7 Step-by-step strategies to increase small business profit
So many businesses struggle to stay alive. Aa a matter of fact 90% of businesses won’t make it to year 10. 50% won’t even make it to year 2. Wouldn’t that be great to learn to be profitable from day 1 of your business?
Of course, it would. I’ll teach it to you.
So, What Are The 7 strategies to increase profits?
1. Increase the number of transactions
2. Increase the number of your clients
3. Increase your price
4. Increase the frequency of transactions
5. Implement the pareto law 80/20
6. Implement highest and best use strategy
7. Remove 20% from your sales
Here are the 7 profit making strategies
1. Increase the number of transactions
Increase the numbers of transactions by 10%.
This is a small step, and you don’t have to work hard for this.
Basically, if you are offering services, find another way to add value to your clients.
Be it, offer a complimentary service or add new product that is related to what you are already selling.
As an example, when you go to MacDonald’s, they offer you fries and a drink.
Think about your service or product and offer that.
Some companies offer subscriptions, insurance, guarantees.
What are complementary services or products that your clients already getting.
2. Increase the number of your clients
Analyse your marketing strategies that has worked and do it again and acquire 10% new business.
This should easily be done. Grab a pen and paper and write down each marketing tactics and strategies on one side and right in front of add the clients that you got.
Once you find the best performer, just repeat it again.
I did this for my business and notice that in one networking event, I obtained 5 clients.
So, I repeated the strategy and got more leads.
Another tactic that works beautifully and 99% of small business owners ignore is referrals.
Referrals are the best method that you can get new clients, most businesses don’t have a systematic approach to this.
Where can you get new clients?
Ask when you send an invoice, ask when you send the receipts, ask on your email signature, ask on your website, ask on your social media, asl on your pamphlets, create a networking group and ask there as well.
3. Increase your price
Most businesses do not adjust their prices in comparison with inflation and cost of goods.
one example, when we started Cloud accounting, bookkeeping and taxation. Price of a single QuickBooks Online Subscription was $1. As a matter of fact, I still have a few of them however, price of a new QBO licence can be $60 now.
So, as you can see my costs have gone by, also prices in general have gone up.
As a result, it is natural that we increase our prices and add more complementary service.
When is the last time you have looked at your price model and made a change?
4. Increase the frequency of transactions
Think about your client and determine how often should they receive what you offer.
For example, you may offer a carpet cleaning business to your client once a year but, according to health experts’ carpets should be cleaned every 6 months. Therefore, you are obliged to inform your client that they must clean their carpets every 6 months. This tactic alone can double the carpet cleaning business.
Another simple example, we have 4 cats at home, normally a house needs to change their air filter every 6 months, in our case we should change every 4 months.
As a matter of fact, when we do this, it reduces cats’ dander and dust and we breath better.
One more example, could be hair cuts. If you have a client that their look is the best if they get a hair cut once a month. Again, you must tell them that you look your best with this style of hair and length. Similarly, the clients would appreciate your professional recommendation.
5. Implement the pareto law 80/20
He proved through statistics that 80% of land was owned by 20% of population. He did numerous data analysis and realized and proved this phenomenon.
How it relates to businesses?
80% of your income comes from 20% of your clients.
Identify these 20% ideal clients and pass the rest to your competition.
80% of your time is spent on 20% of you clients. These 20% may not be the 20% dream clients.
Find the best diplomatic way to either coach them or reduce transactions with them.
6. Implement highest and best use strategy
We are all good at something and not so good in other things. My talent is in getting things started since I know how to take actions. But I may not be the best at finishing something. It makes sense right, I love to start something, I do not love as much to finish. I do finish and complete what I intent to do but my passion is getting things started.
Create a table, right what you are passionate about, what you are really good at, what you are not so good at and also don’t have as much passion. You can one more step and add a dollar figure next to them.
For example, I love and am good at preparing corporate tax returns, this is my strength where I have a great competency. I hate the data entry part though. In addition, the data entry part doesn’t need an expertise and competency.
Therefore, hat I need to delegate the data entry part and spend my time on finalizing the corporate tax return and come up with strategies and connect the dots.
Competency, Passion and Relevancy (CPR) is the framework that you want to work with.
This will make you more valuable and makes your business more profitable.
7. Remove 20% from your sales
Each time you get paid for your service or sales, remove 20% of the cash and put it in a separate bank account. Do not touch this bank account for 3 months after your year-end.
What is the point?
There are a few:
- You will become resourceful to run your business with less. Often under these circumstances we become more resourceful and less wasteful.
- You have saved up 20% of your sales. Depending on the sales size, it could become a good chunk of change.
- It forces to re-think your business model, payroll, rent, inventory, marketing, and other costs
As a matter of fact, our recommendation to our client when we coach them is that, also put aside 13% for sales taxes aside and put themselves on payroll.
Speaking about coaching, we do have the knowledge and the know how to be able to help businesses become profitable.
We offer these service through our Virtual CFO services,
Speak to an Ottawa CFO today by visiting Numetrica City.
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