What are some smart decisions you can make to increase revenues and profits? As a business, you may have many things going for you—an ingenious business plan, the right setup, a great product, happy customers—but if you’re not making profits, you are heading for trouble.
If you’re at a point in your business growth where you are still building momentum, working to counterbalance your high costs or seeking more revenue sources, what can you do to quickly increase profitability so that you can stay in business?
Here are seven ways to jumpstart your business from a good idea to a flourishing enterprise:
1. Hire consultants.
If you’re not making enough money, it could be because you don’t know how to achieve certain desirable outcomes. By working with a firm like Primary Intelligence, you can get the guidance you need to get better sales win rates, better customer growth, and better revenue retention. Such firms offer services like win/loss analysis and customer experience analysis.
2. Invest in the financial markets.
You may be in an unusual situation where your technical idea is still in its early stages of innovation and will be profitable in the future. In this case, you don’t necessarily have to make money from your business to stay in business. You could divert some of your capital toward revenue generation through investing in the financial markets like Forex Trading.
3. Raise value, increase prices.
If you are in a highly competitive market, you may be forced to sell at a low price. Unfortunately, you may be earning less than the cost of staying in business.
While raising the price for your products might be an immediate solution, your customers will simply buy from your competitors. In the absence of an increase in value, they will make their buying decisions on price alone.
However, if you raise the value of your product, then customers will perceive that your product is worth more. Increasing value is not always about making the product better. There are many other ingenious ways to raise the perceived value of something.
Here’s a perfect example of thinking outside the box:
When Domino’s first started out in 1960 with a $500 investment, they were just another pizza company. The company began to prosper when it decided to offer its “30 minutes or its free” guarantee. This satisfied the needs of hungry customers who just wanted something to eat as soon as possible. If Domino’s had increased the quality of their pizza, it would have slowed down how fast they made their pizza. However, customers were more interested in quick satisfaction than in a memorable taste experience. The strategy worked so well that Domino’s became a market leader until 1993. Then, after multi-million dollar settlements from car accidents involving their delivery drivers, they ended their guarantee–and as a result experienced a decline in fortune.
4. Outsource IT.
Creating and maintaining your own IT infrastructure can be a huge overhead. By outsourcing IT needs to a cloud service provider, you will pay much less and may get comparable or better service. On premise IT infrastructure is no longer necessary to run a thriving business. The introduction of cloud computing and SaaS has introduced a cheaper solution that works as well, if not superior.
5. Focus on the 20%.
According to the Pareto Principle, 80% of business revenue comes from 20% of its customer base. Although the reason why this economic rule of thumb is not clear, it does appear to work well in the real world. A small percentage of customers will buy more and complain less. By focusing on that group, you not only give people who are already buying a better reason to buy more and at higher prices, you are also getting rid of the headache of taking care of the 80% who are looking for bargain basement prices and complaining over every little issue. In the bestselling book, The 4 Hour Entrepreneur, author Tim Ferris describes in detail how his application of the Pareto Principle helped him evolve from an overworked, struggling entrepreneur to someone who more than doubled his income and time.
6. Renegotiate Rate.
When you first started your business, you were probably willing to accept whatever rates vendors proposed, but now that your business has matured and proven its value, they may be willing to work with you to give you wholesale discounts. You can also renegotiate your agreement with referral partners, asking for higher fees now that you’ve proven how many customers you can send their way. Both vendors and referral partners may be more than willing to renegotiate to keep your business.
7. Find More Sales Opportunities.
Think of ways to increase sales. Here are some ideas:
- Increase the size of your sales team.
- Increase the expertise of your sales team by hiring a sales consultant to initiate a training curriculum.
- Increase your lead-generation mechanism.
- Increase the number of locations you sell.
- Increase the frequency your sales team sells.
- Increase the quality of the software automation you are using to improve the efficiency of sales.
When you think about it, there may be a number of sales opportunities you’ve overlooked.
Often the only barrier between barely making a profit and making a handsome surplus is creativity. One idea can be enough to spark a flame.