Every business owner is concerned with being profitable, particularly in this pandemic. Profit is not just the money you put in the bank. You need to cover the costs associated with being in business (rent, payroll, taxes, supplies, etc.). The amount left over is your profit margin. While there is no magic formula for making your small business profitable, there are several things you can do to increase your profit margin.
Decide where you can add value
The bottom line of a successful small business isn’t just a number; it’s the perceived value of its products or services. So when a client feels what you offer is unique from your competition, it's a perfect match up. Therefore, it's important to understand your client’s needs and cater your offerings to meet those needs. How do you do this? Ask them!
It’s tempting to think in terms of the end goal: massive growth and a large bank account. Thinking long term is great; however, getting there will be in small steps. Look at your growth incrementally and arrive at a steady plan to increase profit.
Profit and growth go hand in hand. If you are not experiencing the growth you need, look within. Do you need to hire talent that will assist with driving growth? Are your marketing efforts effective? Do you need to re-brand? By examining your current business practices, you can identify what is holding your business back from continued growth.
Get out there!
You should be spending a lot of time finding, and talking to, new customers. How are you going to engage with the right people when you can’t attend events? Think outside the box and find ways to connect with people who may be ridiculously busy. At BudgetEase, in addition to calling those we have worked with in the past, we generate content for our referral sources to make their lives easier and keep us top of mind. Spending time organizing your office or email is not going to give you the traction that spending time with your network will.
There is not a one-size-fits-all marketing strategy. You must customize your marketing strategy and tweak it regularly. Social media is a great way to reach clients. Keep your name out there by preparing a newsletter, offer webinars or training, write a blog, or give out free samples.
Create a timeline and develop a series of steps you and your team will take to increase your profit margin. Set reasonable goals that you can sustain over time. Prepare a short-term action plan that will help you jump-start growth and increase profit at your business. One way we improved our gross margin was by identifying the three most challenging projects for profit each month to determine what we should do differently, such as – attack the project differently, assign the project to a different team member, or estimate the project differently. By reviewing what we were doing wrong, we were able to improve our profit margin going forward.
For you, it could be launching a new marketing campaign, refocusing your energy on a new service offering, or undergoing leadership training so you’re better equipped to lead your company. Whatever you need to do, make sure it’s included in your plan and that you have concrete, achievable goals for your company.
Monitor your progress
Just because you’ve created a marketing plan doesn’t mean your choices are set in stone. Monitor your results as your plan progresses. This may be monthly, or perhaps you check in every three or six months to monitor growth. It’s okay to pivot and change your strategy.
Contact us at www.budgetease.biz to see how we can help you increase your profit margin.