Tips To Help Increase Your Business Profits

Every business owner wants to see higher profits, but many small business owners lose sleep wondering why their profits are not as high as they should be, even if they are doing everything right and closing just as many (if not more) than their immediate competitors. The truth is many business owners overlook a few key tricks to increasing the profits and pulling down a much more desirable amount of money.

Lowering Direct Costs

As a small business owner, you may not have the luxury to spend money on efficiency experts to see where you cut costs so your business can increase profits and trim unnecessary waste. So, take it upon yourself to see where your company can be a little leaner. Analyze work schedules and cut back on any unnecessary hours. Look at the cost of your utilities, web hosting, customer support, and see if you can restructure your operations so you aren't throwing money away to things you don't use for your business.

Your inventory is another place that may be contributing to lower profits. Decreasing your inventory so you aren't holding onto anything that's not generating money is a great way to cut out unnecessary waste. (The best analogy for this is a bakery that bakes dozens of cakes each day in hopes of attracting lots of customers, when the reality is that they sell maybe 10, and the rest get thrown out and are considered a loss.)

You can also negotiate with your suppliers. If your small business has a great record of paying suppliers on time and purchasing from them on a regular basis, they may consider cutting your business a deal for discounted rates on supplies in exchange for your exclusive business. Or they might be willing to recommend your company to their customers and drive business your way.

Increasing Average Sales

Many of you are already groaning because increased sales is what everyone wants out of their businesses. However, there are ways to not only increase the average sale to your customers, but also to grow your client base so the volume of sales increases. Giving incentives to your sales department goes well beyond commissions. Prizes, dinners, paid days off – almost anything is fair game to get your sales team excited and hungry to close deals. Have someone on the sales team focus on social media as a cheap and effective way to reach lots of potential customers. Offer bundle deals and train your employees on how to upsell things so customers think they are getting more for their money. Enroll in affiliate programs where people receive a small amount of money or credit to use at your business if they refer a new customer to your company.

Numbers Do Not Lie

Your profits are the bottom line, but there is a lot involved to get there. As a small business owner, you should frequently run reports to see trends in what your customers are buying, how much time your sales team is spending on closing deals, and how many of those potential clients convert into sales. Check to see how many of your clients are returning customers, and which products or services aren't getting any interest. Maybe you can figure out a way to promote and rejuvenate those things that aren't selling to make them more appealing. Maybe you should cut back on those products or drop them completely.

In the end, by keeping a vigilant eye on your sales, as well as where your money is being spent, you should be able to reduce wasted money and increase your profits. Barring that, it may be helpful to meet with a consultant who can easily identify what is working for your small business and what is amounting to throwing money out the window. By following the above tips and tailoring them to your business, you should see your profits drastically increase from where they are now.