Our economy is continuously growing. Businesses are expanding. The Federal Reserve continues to change interest rates which can create investment opportunities for lenders and banks. That all points to a promising outlook for the coming months. As a small business owner, it is a time to look closer at your profit and loss (P&L) statements to determine how you can increase your profit margins and make the most out of the current economy.
What Can You Do to Increase Revenue and Profit Margins In 90 days?
We know companies have a main goal to increase revenue and profit margins. However, there is always strong competition in most sectors. Let’s look at ways you can boost your profit margins in 90 days without having to use any capital.
1.) Increase Pricing Marginally
Inflation is a key component in a current market. As the U.S. consumer increases confidence in spending, it becomes effective to increase prices – we call that supply and demand. Analyze your current price points. Are you generating enough revenue from each sale to have a sustainable profit margin?
2.) Reduce Cost (Expenses)
Examine your books closely. For example, look at the cost of your Worker’s Compensation insurance. Worker’s Compensation insurance can be very expensive depending on certain risk factors such as industry and claims. You may reduce your Worker’s Compensation insurance by receiving price estimates from other insurance providers. Some states have Worker’s Compensation sponsored programs. Call your local state Worker’s Compensation agency for more details. Try to reduce risk by implementing safety procedures and processes.
3.) Eliminate Tasks that Do Not Add Value to Your Customer
Another way to reduce cost is by eliminating cost that do not contribute to customer value. Examine your cost for customer retention within your profit and loss. Are each one of the expenses directly contributing to your customers’ needs?
4.) Review Your Competitor’s Prices
Along with increasing your prices, take a good look at what your competition charges for services. Focus on three areas; if your competitor’s prices are higher, why? Are they offering something better for their product or service that encourages a higher price point? Are your prices competitively aligned with theirs? If not, what can you do to offer something extra to your customers?
5.) Reduce Overstock
Carrying a significant amount of overstock in your inventory does not improve business operations and it increases your costs. Overstock can drive up cost when product is lost or forgotten. It also hampers your company’s ability to keep inventory costs in line with your goals. Sell any overstock to reduce costs.
6.) Find a Way to Increase the Value of Every Sale
Provide up-sales to your customers. Can you add a product, feature, or service to enhance the customer’s sale, transaction, or experience? Ensure your sales team is offering each customer a special offer, sales, and any discounts by bundling products or services. Up-sales can be done at the close of the deal. If you sell cars, offer an added feature for a certain additional amount or sell an extended warranty or service. If you sell professional services, determine if your customers could benefit from a monthly service or other monthly products.
7.) Expand Product Line or Service
Look for complimentary products and services that do not require a lot of investment and offer them to your customers. What additional products or services that generate revenue could enhance what you already provide? These products or services may not require additional equipment or a large amount of inventory.
8.) Enhance Your Team’s Skillset
Without a doubt, in a sales-oriented business, your company cannot build revenue if your sales team misses their opportunity. Always provide sales enhancement training to improve your sales team knowledge. Focus on moving away from traditional methods toward more efficient and brand-building methods for sales.
9.) Make Sure You Are Meeting your Goals and Projections
Hiring an accounting team to help you explore your current profit margins is critical. However, having an accounting team to help with managing your financials is only effective if you apply the information and insights, they provide to you. In other words, find an accounting team you can sit down with and discuss your goals and projections with and apply the goals immediately.
10.) Build Your Customer Base
Build, Build, Build. Use a variety of tools to help get more customers. Complete a market analyses or survey to better understand who your target customers are. Work to modernize your marketing efforts to attract that specific audience. Always look to grow or expand your market.
Increased revenue and profits begin with knowing where you are specifically. Examine your prices, financial statements, and product and services closely. Always look for ways to reduce costs that don’t contribute to your profits. Look for areas to build your offerings, services, products, and prices to help your company grow its margins. Always have a focus on the bottom-line benefit of any investment you make. Contact email@example.com for more information.