How can profits be increased

Blake is an award-winning consultant, writer, and speaker. As a consultant, he helped over biz owners start and grow their business. His expertise is featured across Fit Small Business in starting a business content. This article is part of a larger series on Starting a Business. How to increase profits is on the mind of most business owners. There are only two ways to do it: increase prices or cut costs. The question is, what are the best and most affordable options for each, particularly during COVID?

Consider the following 14 strategies to make you and your business more money in Once the pandemic shutdowns began, online sales grew significantly. Even after the pandemic ends, people will want the convenience of online shopping or curbside pickup. Now is the time to move into or expand your online shopping capacity. The first step to implement ecommerce is to get your website to accept online orders. To do that, you need a platform that accepts online payments. You can add some of these platforms directly to your current website.

Or you can add them as a free standalone site such as Square. Square is a payment processor that also provides a well-design ecommerce website for free. It also means being able to accept payments remotely. Finally, you might want to consider a delivery service and a part-time driver position. This option is especially important for restaurants that need to set up online ordering.

One way to improve efficiency and reduce costs is by automating processes. A good software or software service can help with everything from payroll to inventory, giving you and your employees time to work on tasks that grow your business. People are using your website to research your company before doing business with you.

Could you improve their experience and build their trust so they are more likely to use your product or service? Your website should do four things clearly:. Begin by ensuring your website is clean, updated, and current in its information and up-to-date in its design. Then test your ecommerce elements to make sure they run smoothly. Once you set up your website , do a search engine optimization SEO audit. The SEO audit will help you better understand how Google and other search engines see your website.

You may need to make SEO-based changes to make your website, which will make it more likely to show when someone searches for what you provide.

Customers can leave reviews on your free Google My Business listing. An easy thing to do to increase conversions and sales in potential customers is to respond to reviews. According to consumers, businesses that respond to reviews are 1. Keep an eye on these sites and address reviews, especially negative ones. Also, share positive reviews on your website and social media.

Get the word out! Finally, encourage reviews by making it easy to do. All industries are at the mercy of overall economic conditions, which impact everything from consumer behavior to interest rates to the cost of raw materials, labor and production. Your industry may find itself upended by a disruptive new technology that changes the market overnight.

Something as straightforward and fixable as careless accounting procedures can also throw off your revenue vs. You start thinking about your ultimate goal, and forget about all the little steps it takes along the way to get there. Instead of falling into that trap, learn to strive for incremental growth. This allows you to make consistent progress and monitor how your business is performing.

Check in with yourself — do you have the time frame and resources needed to consistently achieve your goals? To truly understand how to increase profit margin numbers for your business, identify who your customer really is. Who is this person and what need do they have for your product? An example of a strategic innovator is Netflix. Before the streaming service came along, people were happy to rent tapes at Blockbuster. Netflix saw how they could capitalize on this need for home entertainment, and found a way to make movies even more accessible for their target audience.

They strategically innovated. Who works for your business that not only knows the company inside and out, but is willing to rave about your business and bring in new customers? To increase profit margins for your business, creating an internal culture of raving fans is just as critical as locating your target audience. When you assemble a team of people who are excited to work for your brand and spread your message, it becomes a hundred times easier to be successful.

If you are not happy with your profit growth or margin, you need to take an objective look at your business and identify the gaps. Look at your expense reports, personnel reviews and current sales. What area is lacking? Have you stopped identifying ways to get new customers? Assessing the current state, and possible shortcomings, of your business will help you create a better plan to move forward and increase profit.

The laws of physics apply in business, and velocity matters. Take a close look at your production processes, from your first contact with a customer to the moment your product is delivered safely into their hands. How can you speed up each step of the process? The beauty of studying how to increase profit margin numbers for a business is that profit margins are by definition ratios. Examine all the ways your business spends money.

Where are you losing money through spoilage, scrap or waste? Is your forecasting off, causing you to purchase too much raw material? Call us Some people go into business because they want to make the world a better place, some want to make a better product, some want to provide a better service, and others simply want to make money. Regardless of the reason your business exists , at the end of the day, your business has to have a strong bottom line.

Profits generate growth, attract investors and keep a business on the right path to success. Without a profit, no business owner can improve the world, their products or their services.

The more profits a business generates, the more improvements a business can make in the future; profitable businesses lead to growth and success. You want to succeed personally, and you want your business to succeed, so it's important to always keep a few points top of mind.

Consider implementing the following strategies to increase profits and grow your business Your business will not generate profits if you spend no money at all. Supplies, employees, commercial space, materials and inventory all cost money, but are essential expenses for operating a successful business.

Do not be afraid to spend money when it is necessary to generate a profit. Understanding the difference between profits and profitability is essential to operating your business.

So, each dollar in profit is actually worth less than each dollar your company never spent. By calculating your business profit margin , you can determine how much you have to spend for every dollar your company earns. You can increase profits both by saving expenses and increasing prices. Saving expenses, however, will improve your profit margins but only at a one time multiple of the amount of costs you save.

You will make more money at a quicker rate if you increase prices. Take a careful look at the fees you pay for services such as banking, technology, financing and communication. Shop around for lower prices or try to negotiate your fees to a lower price point.

When businesses have proven their models and have reliable sources of revenue, business owners often become complacent with saving and loosen the purse strings. You should not, however, add unnecessary expenses just because you can afford them. Be careful about how you decide to spend your company's profits, limiting new expenses to costs which will generate business growth or more revenue. Unit economics will help you determine where you can save money in order to improve profit margins and increase profits.