
Failing to make or increase profits is something every business owner struggles with. Businesses facing this scenario need to adopt new practices and find ways to become more profitable. If your business is struggling to make profits, or if you want to ensure that your profits continue to go in an upward direction year after year, Check out some of these tips.
Cross-Sell & Upsell Existing Customers
One of the best ways to increase business profits is to increase efficiency by taking care of your existing customers. Develop a broader array of products that you can cross-sell or upsell to your existing customers. It’s always easier (and cheaper!) to sell to an existing customer than to win a new customer. Create bundles of products to increase total sales prices without having to develop new products. Also, make the buying process as simple and seamless as possible for your customer. A shopping cart with too many steps causes more customers to drop out.
2. Look into Hiring 1099 Contractors Instead of Full-Time Employees
Full-time employees come with many unnecessary obligations for the business owner, such as payroll expenses, healthcare expenses, tax implications, and increased liability. 1099 contractors will work for 100 percent commission or you can pay them a set rate for a job. They don’t require any payroll expense and you don’t have to pay for healthcare. A starting small business should try to decrease expenses in order to increase profits. It’s also much easier to let go of a 1099 contractor than an employee. If at all possible, try to hire 1099 contractors to reduce costs and help increase business profits.
3. Substantially Increase Your Profits by Raising Prices
Raise the prices of your products and services without driving away customers by increasing your perceived value. Work on clearly understanding your audience, the problem you are solving for them, and the way your solution is different. This knowledge can make your brand more valuable and can uncover areas where customers are willing to pay more for your product or service.
4. Understand Your Customers’ Needs & Adjust Your Business Accordingly
It’s not just about understanding who your customers are at a high-level. You really need to dig deep and understand their wants and needs—understand why they either are coming to you in the first place or why they need to come to you. Also, factor in how you are differentiated and how you can ease their problems better than the competition. Once you do that and adjust your business practices accordingly, that’s when you will be better positioned for increased profits.
5. Follow the 80/20 Rule
To quickly increase profits, implement the 80/20 rule. Do a quick Pareto principle assessment (i.e., the “80/20 rule”) to determine which are your most valuable customers and/or products. For example, if a customer is not one of the 20 percent who bring in 80 percent of your revenue, then you’re probably safe de-emphasizing them and focusing on others. Further, if those same customers happen to be part of the 20 percent of your customers that take up 80 percent of your time, then letting go of them will probably free you up to do more effective and efficient activities. So do some quick analysis to see which clients to focus on and which to de-emphasize. Focusing on your most profitable customers and products will help you quickly increase profits.
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