SEVEN WAYS TO INCREASE YOUR PROFITS NOW.
If your company profits are too high or if you simply don’t need to make
any more money than you made yesterday, don’t bother reading this report, it’s
not for you. If, on the other hand, you feel that your company is not reaching
its potential when it comes to your bottom line read on.
As the owner of a small to medium size company, your time is at a premium.
You certainly didn’t start your company with the idea that you would work
twice as hard and twice as many hours for half the money that you earned as an
employee. Yet, many entrepreneurs fall into this trap. Your business seems to
run you instead of the other way around. You never seem to have enough sales, or
make enough money to really live the way you want or run the company the way you
envisioned.
The following seven steps are some profoundly simple methods that you can
start adopting today to make a difference to the profitability of your company.
Nothing discussed here is rocket science. It simply boils down to understanding
how your company functions and one very important question. Will you take steps
now to implement one (or all) of these ideas?
1. Increase sales to your existing customers. This may be one of
the most overlooked aspects of your revenue. You likely put great focus and
effort toward developing new customers, yet, you may be forgetting the
customer you just made a sale to. Ask yourself how you can sell to that same
customer again and again. Depending on your industry, the cost to acquire a
new customer can be 10 times that of selling to an existing customer. In fact,
the true value of a first time sale may actually generate a loss on that sale
for you. The lifetime value of a repeat customer is exponential to a one-time
sale. You have spent money on advertising, promotion, commissions and other
means to get the customer to buy. The expenses associated with those customers
are now sunk costs. Assuming that you have provided what you said you would,
customers will come back because they will trust you. Studies have shown that
at least 34% of customers will buy from you again, if you make an offer to
them. All you have to do is ask. Let them know you appreciate their business.
When was the last time you thanked a customer and acknowledged their purchase
after the fact? Discounts offered to special customers are less time consuming
and much less expensive than the costs of converting new customers by
developing new leads through advertising, and promoting.
2. Review your advertising strategies to increase your sales leads.
If your company is like most, you have tried advertising such as direct mail,
brochures, internet web sites, yellow pages, telemarketing, newspaper
advertisements, radio, television, flyers, bill boards, email, fax, trade
shows to name a few. Do you know how effective each individual advertising
method has been for generating profit? You are throwing money out the window
if you cannot answer that question. You should know the number of responses and
the conversion rate of response to sale for each ad type that you spend money
on. You should be able to tell which advertising medium and which copy gave
the best response and then translate that response to sales. If you are not
getting responses to your ads, either change the headline, change the copy,
change the medium, or drop the ad. Why spend money if the ad is not making
money for you? Now some people might try to convince you that you
"can’t really tell how much that ad will make because it’s branding.
You just have to keep your name out there." We feel that every piece of
advertising that you undertake can be measured, must be effective, and must
give you a return on that investment.
3. Ask For Referrals. Assuming that your customers have been more
than satisfied with your product or service, ask for referrals. This can be as
simple as asking for a testimonial to use in your advertising campaigns or can
be more sophisticated involving types of referral payments. Human nature is such
that if they have received something of value, they will talk about it with
others. If you have provided extraordinary service, your customer will be
boasting about you to others. Find ways to use your customers pleasure with
you to generate other leads and turn those leads into sales. Human nature is
quick to ask the principle of WIIFM – What’s in it for me?
Offer an incentive to the referral source for their time and effort. Perhaps
discounted purchase prices, referral fees as a percentage of sales, or a joint
venture by which you can profit from each others customer and supplier bases.
For example, your business is a marketing service. One of your clients
manufactures a consumer product. There is the potential that some of your
customers and suppliers will require and appreciate your client’s product.
On the other hand, your client has a customer and supplier list bursting with
leads that could use your marketing expertise. Obviously you don’t want to
discuss your customer and supplier lists with a direct competitor, but
non-competitive, complimentary opportunities do exist right in your own
database. You need to understand all the relationships that you have with your
business and find ways to lever those relationships for mutual gain.
4. Cost Base – Cash Flow / Cash Flow / Cash Flow. Most advice
about increasing your bottom line is focused on cutting costs. Perhaps
this is because costs are the easiest to identify in any company. The premise
that we take with our clients is to ensure that every dollar spent in your
company can be identified, and measured against your desired return on your
investment. By measuring these costs against your desired return, you are able
to identify cost areas that are not efficient or needed. As we discussed in
point 2 about advertising, every expense must be measurable and contribute to
your bottom line profit for long-term sustainable growth of your company. Only
by understanding the relationship of an expense to your bottom line can you
make intelligent decisions with regard to cutting costs. If you do not
understand this relationship, you risk making decisions that negatively effect
efficiencies, operations, and your ability to profitably produce your product or
services.
5. Unused Inventories. This is relatively easy for companies that
sell physical goods and products. Inventory is a part of your business and
some product becomes obsolete, over produced, slightly damaged or may be
affected by seasonal sales cycles. Carrying this type of inventory is taking
directly from your bottom line. Sell it to your customers at a discounted
value, by creating a "special invitation only" weekend warehouse
sale for your special customers not the general public. Consider selling
excess to inventory discounters. Put your excess inventories for sale on the
internet through the various auction type web sites that are available. Turn
over unused, stagnant inventory into cash that you can use in your business
today. For service companies "inventory" may mean unused manuals,
generic reports or other intellectual assets that you have in your company. Perhaps you can
market this inventory as added bonuses to your clients. Explore opportunities
to market this expertise on the internet, on CD’s or write an article or a
book. Opportunities abound for turning unused inventory into your bottom line
for either tangible goods or services. You will be limited only by your
understanding of these assets and your creativity to turn them into dollars.
6. Automate Or Outsource Systems. Before you can automate systems in
your company, you first need to understand the systems that you use. Many
small to medium size companies are dependant upon manual systems just because
that’s how the company started. Accounting, payroll, sales, customer
support, newsletter and e-mail marketing are just a few of the obvious areas
that can be automated or outsourced at very little relative cost with huge
impact to your bottom line. For each process or system that takes time and
effort on your part, find out if technology or a service can be provided to
meet your needs. Avoid falling into the trap of thinking you can do the work
yourself and save the money. For every task you currently do for your company
ask yourself how much better you could use that time to strengthen your
relationship with customers, market your company, spend time with your family,
or to simply focus on what you do best and find most enjoyable about your
company. For example, if spending $1,000 on software to automate an aspect of
your company translates into profitable revenue because you have the time to
focus on generating profit, why would you spend time anywhere else? If you can
outsource payroll for your company at literally pennies per employee, why
spend your time writing cheques, and trying to understand various government
deductions and forms? You should be using that time to generate
more leads and customers for your business. Before you say "it’s too
expensive, we can’t afford it", make sure you understand the real cost
to your profits, to your time, to your family and to the reasons why you
started your company.
7. People. Whether you are a one-person company or have hundreds of
employees, look to yourself first to increase your cash flow and profits. If
you don’t understand your company, or if you don’t clearly communicate
expectations and vision, don’t expect anyone else to. Clearly defined goals
and objectives will allow you to identify and attract the best people for each
aspect of the company. Everyone should be sales and service focused from your
receptionist, to the employees on your shop floor. For every contact
that you and your employees have with someone outside your company, there
should be a "sales script" that communicates to potential and existing
customers the benefits of conducting business with you and that you genuinely
appreciate their needs and their business. If every employee adopts an outward
focus of first understanding customer needs, and then servicing those needs,
your cash flow and profits will increase.
Our experience has shown that there are literally dozens of different ways
you can increase profits just by understanding how your company functions
internally and externally with all your business relationships. If you
implement just one of the ideas discussed here, you are certain to generate
larger profits in your company.
