Is your business struggling to generate a return on investment? Read on to learn how to increase business profitability.
Improving business profitability involves a two-pronged approach: Increasing sales revenue and decreasing costs. According to corporate experts, a single factor can produce results, but in normal circumstances, it’s the implementation of small improvements that result in significant profitability improvements. Regardless of the business size, organizations need to change their practices to focus more on profit.
In this guide, you’ll learn some effective ways to increase business profitability.
Enhance Your Firm’s Visibility
If you’re struggling to keep up with the competition, look for ways to set yourself apart from other market players. If you have licenses, certifications, and accreditations for your business, make them known to your target audience. Take your standing and status online, using your website, social media profiles, and blogs to set up strategic alliances and expand your customer base.
Establishing your online presence opens up a myriad of new marketing opportunities. You can leverage affiliate marketing tools to drive web traffic to your website, benefit from referral selling, and work with complementary businesses for advertisement sharing.
Offer Ongoing Retainer Plans
If you’re a service-based business, one of the most effective strategies is to offer ongoing payment plans or prepaid retainers to clients. For example, instead of a one-time service contract at $150 an hour for a day, modify your offering and offer a discounted 20-hour retainer plan for $100 per hour. Even though your hourly rate is lower in this case, you’ll be making a lot more money due to a longer-term relationship with the client.
Focusing on building client relationships also opens up doors for additional work. You should be able to develop new revenue streams through them.
Costs have a strong impact on business profitability. You should certainly want to reduce wastage, but make sure that you don’t compromise on product or service quality in the drive to reduce costs. Adapt your production process to make it more streamlined and utilizes fewer resources and working hours. This can reduce your labor costs.
In addition, think about whether you’re getting the best deal from suppliers. If you’ve been working with them for a while now, you might now be in a much better position to negotiate better terms. Or perhaps it’s time to switch to another supplier.
Then, apply the same concept to financing. Make sure you’re utilizing your overdrafts and loans in the most optimal manner. If they’re not at the most competitive terms, negotiate with the lender.
Likewise, if you feel you’re not making the most out of your premises, consider subletting the unused space, so you can earn from it.
These were some valuable tips to increase business profitability. If you’re looking for a full-fledged business recovery solution, consider hiring an experienced consultant. They will understand your business and come up with a powerful plan to improve business profitability.