Sales revenue and the business’s costs are the great determinants of a business’s profitability. Improving profitability, therefore, consists of minimizing the expenses involved by identifying areas where you can save money while maximizing sales revenue. Identify and measure the main factors that grow your profits and then develop cost-effective strategies to improve them. Select the essential plan and work on implementing it.
Tips for business growth
Businesses need to be more proactive if they want to grow and be profitable. The following are some of the ways that can help your business to be profitable through its growth strategies:
- Increasing market share – venturing into new markets is one of the best ways for a business to grow. With this, you should aim to test how your products and services would perform in a new market.
- Introduction of new products or services – this is another strategy that can help your business expand. By following this strategy, you will satisfy your existing and new clients.
- Merging with or acquiring another business – mergers and acquisitions are some of the best ways for businesses to grow. Besides, this strategy provides the best way for businesses to increase their profit share.
- Opening a new location – you can launch new branches or stores as a way to boost your customer base.
In addition to these top 4 strategies, to need to:
Improve your social media presence
Take your business closer to your target clients through online platforms such as LinkedIn, Instagram, YouTube, Facebook, and Twitter. These social media platforms have led to a revolution in today’s marketing. It is all about how fast and close products and services are to the client. Your media should also be active enough for the visibility of the clients. Introduce special online promotions, hold meetings and webinars on your scope of business, introduce podcasts and other online resources to benefit your clients. All these activities should also promote your brand, products, and services. Evaluate all the marketing activities and identify those that are beneficial and cost-effective.
Increase your business cash flow to the maximum
If you are looking to attain a stable cash flow, consider offering different payment plans to your clients, such as a continuous payment plan or pre-paid deposits. For instance, in place of charging a consulting client $200 per hour for a full day, you can opt for a discounted retainer plan of $150 per hour for 20 hours. This plan may not seem profitable initially due to the reduction in the rate per hour. However, the gain will be more significant eventually, as the plan builds stronger client relationships and widens the opportunity for more work. Your client will be signing up for a long-term agreement.
Automate your business management system
Automating your business will help you respond to questions such as, ‘how much is in your accounts receivables?’, ‘what is your business conversion rate?’, ‘how efficient are your employees?’ etc. The automated system should enable your employees to access and key additional data. Ensure that the information in the system is constantly updated and synchronized. This way, your business will run with ease as your employees complete more work in the back office. It will also help in streamlining the cost of management.
Profits are different from sales revenue
A business’s revenue is the money earned after selling goods and services. On the other hand, profit is the money left after deducting tax, loan interest, and other operational expenses from the revenue. The revenue that you collect determines the profitability of your business more.
High sales revenue drives one part of the business profits, while your management of the operating costs and production fulfills the other. If you ignore the cost and production, you may increase sales and decrease profits. The decline can happen if the sales increase is only on items with a low-profit margin, if your operating expenses increase beyond sales revenue, and if the cost of producing your products and services is higher than the sales revenue.
The essence of increasing your customer base is to have more sales, increase revenues, and reduce operational expenses. Therefore, it is essential to look into the production and costs management even as you look into the revenue to have the appropriate evaluation of your business profitability.
Build a personal business website
A website plays a major role in advertising your business and promoting your products and services. In present times, a website works as an online shop, open for retail clients. A web-based shop allows you to reach even many potential clients worldwide. What’s more, the physical shop costs such as rent, transport to work and back home, garbage collection, are not incurred when you opt to go online.
Creating a website may seem like a huge investment, requiring vast experience and an array of technical skills. However, websites have come up where you can do it yourself without any technical skills at an affordable rate per month. The site aids you in registering your domain name, provides you with several email addresses and a variety of templates that you can use to build your business website. Their server then hosts your web pages. You can also opt to set up an affordable site through other hosting companies and search engines.
Bottom Line
Growing your business and selling it profitably is not a one-day job. First, you need to follow the tips outlined in this post for your business to grow. Then, you will need the assistance of a professional Business Broker, Orlando, who will push for the best deal when you decide to sell your business. At the end of the day, you need to be patient and trust the process for you to achieve this.