10 Ways to Try Increase Profit for Your Business
Warning: If you don’t want to increase your business profits, you shouldn’t continue reading.
Are you still here? We thought so.
Below you’ll find the top 10 ways for your business to increase profits – after all, who doesn’t want to see more business profits? That’s the whole reason you got started, so don’t miss out on these tips! Some are specific to businesses that sell products but the general points apply to all businesses – whether you provide a service or sell a product.
1. Reduce overhead costs to increase profit
Overhead costs can include expenses such as insurance, rent, utilities, transactional costs, equipment (and maintenance of it), domain hosting, and more. That list can go on and on depending on the sort of business you’re running, how long you’ve been in business, the efficiency of your business, and so on.
The bottom line: the fewer overhead expenses you take on, the higher your business profits will ultimately be. You can do that by flat-out eliminating some of those overhead costs, for example by making room at your home to store your inventory or by learning to repair your own equipment without the help of a technician. You can also reduce overhead costs to increase profit by finding better deals or by negotiating with your current service providers for better rates.
2. Get rid of processes that don’t add value
Make a list of all of your business operations and rank them according to the monetary value they bring to your business. For example, spending money on a warehouse to store your inventory will likely fall closer to the top of that list since it allows you to handle many more orders than if you were to store your inventory in your home.
On the other hand, creating high-quality video advertising may put a pretty big dent in your business budget and end up costing you more money than it’s bringing back in – which would place it nearer to the bottom of your ‘value’ list.
The bottom line: you want to free your business of any processes that don’t have a high-enough ROI (return on investment).
3. Find your most profitable products
Chances are that your business is selling a range of products, but that only a small number of them make up the bulk of your profits. To increase profit for your e-commerce store, you can begin shifting the focus of your marketing efforts more towards those items that are most profitable.
Determining which of your products is most profitable doesn’t have to be difficult. You essentially need to determine your cost per item and then compare that with your retail prices. Whichever item has the largest difference is your most profitable.
Remember, your most profitable products aren’t necessarily those that you sell most of. It’s about the absolute Euro amount you’re gaining from those sales – one sale of a very expensive item could be worth more than the sale of one hundred much cheaper items.
The bottom line: pick out the products that make you the most money and put more energy into e-commerce advertising for them. Stay focused on your money-making items and do what you can to generate more sales for them.
4. Optimize your inventory management
There are a number of e-commerce challenges related to inventory management including having to juggle multiple channels and/or warehouses, overselling, overstocking, lacking data insights, and managing sales manually.
Those obstacles may or may not be of concern when you first start your business, but eventually, you’ll want to expand your store and you’ll very likely face those issues. Best to be prepared if you plan to increase profits!
The bottom line: you can optimize your inventory management and business profits by:
Owning or renting a warehouse that you have some control over
Considering dropshipping which will help resolve stock level issues
Working in sync with seasonal changes (e.g. change items offered, minimize inventory sizes, etc.)
Using an online inventory management system
5. Increase prices to optimize business profits
The retail price of your products should reflect not just the quality and cost of those goods, but also the value that you yourself offer in the customer’s shopping experience. Ideally, you’re doing a lot to give your customers the best service and support possible, so be sure to consider that value when deciding on your pricing strategies.
It’s true that customers can almost always find the same (or very similar) products elsewhere and maybe even at lower prices. Remember that customers don’t always boil their decisions down to how your prices compare to your competitors’ prices. They also consider the difference in service quality as well as the cost they’re willing to pay for such a service.
The bottom line: there’s nothing wrong with raising your prices in an effort to increase profits, as long as you’re providing customers with some form of compensation for those higher prices.
You made it halfway – take a breather!
6. Sync with your team members
Success for e-commerce businesses depends enormously on having clear and effective lines of communication between the business owner and their employees as well as suppliers.
Has a certain item run out? Is there a glitch in a part of the checkout process?
Speedbumps come in many forms and when communication breaks down, problems are almost inevitable, and solving them is almost impossible.
The bottom line: with reliable systems for communicating with one another, team members can ensure that issues are avoided or at least resolved in a timely manner. Listen to what team members are saying about how to increase business profits – they may have very useful insights to give!
7. Streamline operations
You may be able to get away with running your business operations more-or-less manually at the outset. But as your business expands and grows bigger, complications and redundancies can start slowing down operations and cutting into business profits. One of the best ways to streamline your internal and your external operations is to utilize SaaS (software as a service).
It’s also good practice to set a strict schedule for regularly occurring procedures such as team meetings, bill payments, reviews, system updates, and so on – that way you’re not left scrambling last minute to arrange a sit-down with team members or, even worse, forgetting to do it altogether (gasp!). One more way to streamline operations and increase profits is to combine roles and/or responsibilities whenever possible.
The bottom line: Rough edges in your business operations can create real drag on your business profits. Smooth out those sharp corners with the help of technology and some good old fashioned attentiveness!
8. Save on rent
This tactic to increase business profits is pretty self-explanatory. How can you save on rent for your business? Maybe you’ve heard the saying that ‘the squeaky wheel gets the grease’. That applies in this situation as well – speak with your landlord and see if you can negotiate for a better rate. The worst-case scenario is they say no, and you lose nothing in the process of asking.
The bottom line: you never know if you can get a better deal on your rent until you ask. At the very least, you can use it as an opportunity to ask for them to not increase the rent when you re-sign the lease (which can help business profits later on down the line).
9. Increase sales efforts
How you incentivize your employees may depend on how many employees you have, whether you work face-to-face or remotely, what sort of incentives they prefer, and so on.
Consider the following incentives for your sales team:
Individual rewards for a set amount of sales (e.g. TVs, spa vouchers, etc.)
Group or team rewards (e.g. trips, gift cards, etc.)
Don’t stop at giving your employees that extra nudge though. You can also incentivize your customers to make purchases!
Consider the following incentives for your customers:
Create a loyalty program that offers rewards
Tell customers of upcoming special offers
Send out free samples (if applicable)
The bottom line: giving employees a push to make sales or giving customers a push to make purchases doesn’t mean you need to dip into your business profits. Set up those reward programs so that they only trigger when your employees or customers have passed a certain threshold of sales or purchases.
If you’re looking to increase profits, this is one step you will not want to skip. When checkout processes are lengthy and complicated, it gives customers more time and more reasons to abandon their carts and go shop somewhere else. Even worse, if customers reach the checkout and are surprised with extra costs, there’s the chance that they pass frustration and go straight to being angry – which can lead to bad reviews and cut into future business profits.
The bottom line: keep your store’s purchasing process smooth and simple for your customers. Give them the ability to create an account and save their payment details if you have an e-commerce store so they can do quick checkouts next time. Use a merchant service provider that offers a number of payment options for your customers. Just make it easy!