When you launched your business, you may have gone into it with the solutions and procedures that seemed good at that time. However, as costs rise and profits consequently decline, it’s crucial to take a hard look at your business for ways you can save and increase your profitability.
If you’re looking to increase your company’s profit margins in 2020, consider the following easy, innovative solutions.
Remember, time is money. Anything you can do to speed up your production is worth the cost savings. For example, you could hire an outside firm to handle your design or coding. Taking that off your team’s plate would save you enough time and resources that it might be worth the agency’s cost
Cut the waste. If you’ve got some sort of product or program that’s not providing value to you or the customer, get rid of it. Bloated project management system? Out the door. Rewards program with a low ROI? Can it.
Increase your rates. Costs of everything are going up — why keep your rates in the ’00s? Transition your packages and prices to a higher rate. Just be sure to warn your customers or clients, or raise incrementally so that you don’t shock them.
Package your products and services. If you’re worried about sticker shock, consider what you can package to increase the value for your customers or clients, or see what you can affordably squeeze into an existing package. With advancements in technology, some of your costs might be lowered enough that you can pass-through the savings to your customers. For example, now that chatbots are much more affordable, consider tossing one into your web package for a markup. Your customers will see the value and not think about the boosted price tag.
Keep an eye on your operational costs. Are there tasks that could be automated or streamlined? Trim the fat so that your people can focus their attention on tasks that only humans can do. For example, rather than hiring someone to answer the phones, use a virtual assistant or automated VoIP system and hire someone for a creative or strategic responsibility instead.
Shorten the sales cycle. Whether by improving your conversion rate with proper SEO or chatbots or by cutting out unnecessary steps in your sales cycle, you’ll definitely save money and increase your profitability if you can get your customers to purchase as soon as possible.
Offer add-ons as a means of upselling. Customers don’t respond well to being asked to purchase something additional that’s the same as their current purchase price. Find things you can toss in for a few extra bucks.
Work on customer retention. What can you do to build loyalty among customers? Win them over with improved customer service. Offer free gifts or reward programs only if those incentives won’t hurt your profitability.
Learn to negotiate. If you’re finding that your clients or retailer relationships aren’t as profitable as you’d like, make a plan of action for renegotiation. Be willing to compromise or concede in exchange for increased profitability. Consider bringing on an experienced negotiator — the cost might be worth it as your ROI increases.
Audit your inventory. Is there stuff that’s not moving? Stuff that just won’t sell? Sell as much as you can at clearance prices and donate the rest for the tax write-off.
Eliminate variation. Consider switching from standard phone or Internet plans that charge for variable calls to a flat-rate plan. Use your utility provider’s business savings plan if available. Buffering against swings in overhead costs can ensure that you have more consistent expenses and help you plan your budget for maximum profitability.
By following these steps and implementing best practices, you can maximize your business’ profitability in 2020. The basic rules of thumb are to cut waste, automate, and package as much as possible. What solutions help you be more profitable? Let us know in the responses!