5. HIGHER PROFITS
Obviously there are 2 major ways to increase your overall profitability… increase revenue or/and decrease your costs of doing business.
Let’s discuss increasing your profitability first. How about a really simple strategy – raise your prices. Most small businesses have NEVER raised their prices. That’s because they don’t know the facts when it comes to increasing their pricing. They’re scared to death that ANY price increase, no matter how small, will lead to a mass exodus of all their customers. But is that really true?
For instance, we recently discovered a pricing strategy that allowed one of our clients to instantly DOUBLE their price, which only decreased their customer order rate by 17%. That achieved 75% increase in gross revenue… just by applying one simple strategy that didn't cost this business owner a thing.
But now let’s discuss option two… decrease your costs of doing business.
One of the best ways to do this is to cut your labour costs. That’s a HUGE expense for any small business - salary, benefits, national insurance, etc. really add up. And yet, what can you do? You MUST have the labour you need to operate your business… especially as other strategies we’ve looked at begin to create exponential growth for your business.
Several strategies and tactics are worth looking at – the main question for each operation in your business you should ask is: ‘What alternative I can adopt that will achieve same quality at half or less the current cost?’ Now think about your appointments booking system, secretarial, administrative, book-keeping, energy, communications, travel and deliveries.
We recently scrapped off some costly operations for a Hairdressing Salon achieving £17,000 of net annual savings. £17,000 in additional annual revenue increases the valuation of that business somewhere in the range of £51,000 - £68,000.
Are you missing hidden profit in your business?
If you get very conservatively 10% increases in each of the five areas over a year, what would your profit figure look like?
And what if the increases are 20% or probably 50%?
The only thing standing in your way now is getting all of this implemented in a timely and efficient manner.