7 Ways to Build More Profit Into Your Small Business
As you prepare your business for success in the coming year, will you focus your time and resources on sales growth? While it's important, it's often not enough. For sustainable growth and profit with a lot more control, spread your efforts around - creating small improvements in ALL areas of your business. It's the formula for a business that is simple, fun and profitable!
So where do you start? Here's the formula I recommend.
Planning. You don't need a 50 page business plan. But you do need some clear, measurable goals with specific 'actions' you need to take to achieve them. Written goals and a simple action plan provide you with focus and clarity. So take the time to write down what you WANT (results or outcomes) and what you need to DO (actions) to make it happen.
Products/Services. When was the last time you actually thought about the products or services you offer? It's more than just 'what price should I charge'. Which ones are most profitable, which produce the most sales? Do your products and services still meet the needs of your target customers and clients or do they need a facelift? Technology, competition and your customers needs change over time - make sure your products and services keep up!
Promotion. Sales don't just happen. So what are you doing to attract new clients and keep existing ones coming back and referring others? Most owners associate promotion with marketing for new clients - and invest few (if any) resources on current clients. Big mistake. Make sure your plans also include tactics to turn your current clients into raving fans - who spend more, buy more often and refer other quality people to your business.
Processes. Streamlining and standardizing procedures make daily operations easier, efficient and more effective, whether you are there or not. They are also a key to increased profitability. As you plan for the coming year, make systematizing your business more of a priority. Start with just a few. Focus on those that save you time, increase sales, or fix problems that consistently erode profit.
People. No business operates successfully in a vacuum - we all need help from others. While we often associate people with employees, building a strong network of contractors, vendors and alliance partners for your business is equally important. Your needs will vary based on your business - but most small businesses have an opportunity to improve in this area. Have a method for hiring or developing new relationships with people who are committed to your clients and the success of your business.
Personal Development. As you grow and improve, so will your business. We are all familiar with the phrase, knowledge is power, but it also translates to earnings or income. And it doesn't require a lot of time or money - just a commitment to learning and building skills and knowledge. Here's a few things to consider:
- Invest 15 minutes a day reading and you will read about 12 books a year.
- Turn drive time into learning with audio books.
- Attend interactive workshops or webinars to improve knowledge gaps or simply get new ideas.
- Meet with and build relationships with other successful business owners so you can share information and learn.
- Work with a mentor or business coach who can help you find hidden opportunities, provide shortcuts to results and accountability to get more done.
Profit. You don't need to be an accountant or financial guru, but you do need to track and understand the numbers that drive your business - beyond just sales. Here's a few others to consider: average sale per clients or transaction, number of leads, revenue per employee, average accounts receivable, gross profit margins, clients retention rates and net profit. Monitor them and focus on activities that help to improve them - especially gross profit margins and net profit. If you keep them at the center of what you do, your small business will continue to serve your needs and the needs of your people and clients.
Remember, little improvements in ALL these areas will put more profit on the bottom line and in your wallet. So take the hybrid approach: bring together all the key elements that drive success - and you too will have a business that is simple, fun and profitable.
By Joan Nowak
Photography by © Rick Becker-leckrone
Joan Nowak is a Small Business Profit Builder, seasoned Business Coach, and creator of the Hybrid Coaching System for small businesses. For additional resources and ideas to grow your small business, visit http://www.HybridBizAdvisors.com. While you are there, join her mailing list to get her monthly eNewsletter and receive a FREE copy of her eBook, Mastering the 7 Elements of Business Success.