6 steps to help grow your business profits
Every small business faces big challenges. Rising costs. Interrupted supply chains. Online competition. And stretched consumer wallets. What steps can you take now to strategically grow your business and boost profits? Follow this 6-step action plan to help you focus on the crucial drivers of sustained growth.
1. Know Your Numbers
Financial statements are a snapshot of your business's overall financial health. Take a deep dive into your income statement, balance sheet, and cash flow statement. Identify wasteful (or unnecessary) expenditures, underperforming products, or services, and underutilized assets. This is your blueprint for making strategic changes. And if you’re not numbers savvy, talk with your accountant, CPA, or business consultant.
2. Optimize Your Pricing Strategy
The goal of price optimization is to determine the best price that will help attract customers, maximize sales, and increase profits. Are you charging too little for the value you provide? Regularly evaluate your pricing against competitors and ensure you're not leaving money on the table or charging too much.
A common approach to optimizing pricing is to implement different strategies depending on the product or service:
- Penetration Pricing: Pricing a new product or service purposefully low in order to attract a larger customer base, especially those that may be price sensitive.
- Premium Pricing: Setting a higher price than competitors for a product to create the perception of a high-end product.
- Tiered Offerings: Offer different pricing tiers or bundled services/products to help attract various segments of your target market, allowing them to choose based on their budget and needs.
3. Increase Your Leads
The path from changing a prospect into a customer begins by engaging potential buyers through a variety of lead generation strategies. Follow these proven approaches:
- Make of list of your most successful promotions and engagement efforts. Learn what really works for your unique business.
- Educate your prospects. Use social media tools and blog posts to highlight promotions, provide solutions to problems, and position your business as a resource and not just a provider of products and services.
- Incentivize referrals. No one knows how valuable your business is quite like your existing clients. Referral programs that encourage them to speak with their friends and family about your product not only benefits your company but customers too if they are also rewarded.
4. Convert Leads into Customers
Once you have the leads, nurture them. Whether it's through email marketing, digital ads, follow-up calls, or personalized offers, ensure that potential customers move smoothly through the sales funnel. Clearly communicate the benefits and value of your product or service - showcasing how you stand out from your competition.
- Organize training for staff on selling techniques and closing methods. Provide staff with incentives or bonuses for higher conversion rates.
- Engage customers and prospects with ideas and information that will want them to learn more and buy from your business.
- Run loss leaders - products or services at below cost to convert customers across to your business and then sell to them over their lifetime value.
5. Increase Your Average Sale per Customer
Ideally your business should be maximizing every sale. Upselling, cross-selling, and bundling your products or services together can increase your revenue per customer and ultimately your profits.
- Upselling - suggest or recommend a more expensive or higher end item or service.
- Cross-selling - offer your customers an additional or complementary product or service to an existing customer.
- Bundling - package products or services together (often with a discount) to provide customers with a higher perceived value and increase that individual sale.
6. Invest in Customer Retention
To gain new customers, it’s easy to overlook the long-term value of an existing customer. In fact, it costs 5 to 25 times less to retain a current customer than to acquire a new one. Check out these strategies:
- Create a strong onboarding experience. Your first impression can be a lasting impression if followed by well-timed emails, follow-up messaging, and promotions for new customers.
- Deliver a personalized customer experience. Avoid providing one-size fits all solutions for customers who have unique needs or preferences.
- Implement a customer feedback loop. Encourage customer feedback with social media, surveys, and asking customers how they feel about your offerings and what they expect from your business.
A well-structured action plan serves as a compass, guiding your business through market challenges, economic fluctuations, and evolving customer needs. Rather than focusing on large increases in one area, look at all the above areas and concentrate on small increases in each for better cumulative results.