Business Profitability - 10 Ways To Boost

10 Ways to Boost your Profitability

So many business owners work hard - really hard - just to break even or keep afloat. Each one of us deserves reward for our efforts, whether that be financial or personal. The question to ask yourself is whether you are directing your effort in the right places, to get the reward you want?

Of the businesses I've seen and worked in, there are plenty of ways to mis-spend effort - that is, to work hard - but on the wrong things. Here are ten of the most common areas where the return on your efforts can really be ramped up.

1. Marketing Inconsistently

Once you have committed to owning and running a business you must be equally committed to marketing and selling the products and services of that business. It is difficult, if not impossible, to stay and remain profitable without a commitment to ongoing concerted marketing.

To get more out of your marketing, create a simple marketing plan that includes marketing activity every day, every week and every month. Marketing plans combine formal activities (such as advertising, promotions and writing) with informal activities (such as making new contacts) . Don't underestimate the power of talking to people about what you do. Use every opportunity, every time.

2. Fear of Asking for the Sale

Isn't it true that we think asking directly for someone's business means coming across as pushy or obnoxious. But if we have this attitude, we are letting profit-producing opportunities pass us by. Worrying more about what someone thinks of you than bringing more money into the business is an all too common mistake. If you find it difficult to "ask for the sale", you can be sure that you're not bringing in as much money as you could be.

The most effective way to address this issue it to practice asking for the sale in language that you are comfortable with (not too wishy-washy please). Write down what you want to say first, then practice it over and over. There is also plenty of stuff out there on handling objections. Prepare your responses to the most common objections so you are well armed before you speak with your prospective customers.

3. Getting help

Most business owners possess strengths in one or two specific areas, but whether by necessity or design, they often end up working in areas they aren't strong in. This builds inefficiencies and potential for mistakes into the business. To compound the problem, we don't ask for help straight away, but struggle on doing the stuff we are not suited to (saves money right?) But each day that goes by with your business running at less than maximum efficiency, means dollars lost from your pocket.

Work out where you add the most and least value in your business. Pay someone to help you out with these low value add activities. Your time is best spent where you add the most value. If you can do more of this kind of activity, your business will benefit.

4. Use your Existing Customer Base

All the research tells us that it is easier and cheaper to keep working with customers you already have, than to get new customers into your business. If you are not following up with past customers on a regular basis you are reducing your profitability potential.

Develop strategies to keep your customers with you, such as loyalty plans, regular communications and special offers. Implement a regular process for following up your customers after they buy from you.

5. Managing Expenses

Savvy business owners regularly appraise their business expenses and find ways to reduce costs without sacrificing quality. If you haven't completed a cost analysis lately, you might be paying more than you need to be, which will reduce your profitability.

At least once per quarter you should review your expenses and negotiate for adjustments as appropriate. Categorize everything you spend under 3 headings: Essential, Nice to Have and Non-Essential. Everything in the last two categories is up for grabs ? be ruthless!

6. Spending large amounts on glossy, slick marketing materials and expecting business to pour in without any additional effort.

Glossy brochures and slick marketing materials are a nice addition to more active forms of marketing such as meeting people, calling people and speaking to people. However, brochures and business cards, no matter how beautiful, do not replace direct contact. If you are spending money on flashy marketing materials in the place of marketing directly, your profitability will suffer. The most effective form of marketing comes from you talking about your business to others.

Marketing materials are an expense, and to be sure they are working, you need to get some handle on the return on your investment. At the very least you should be tracking where new business is coming from so you can get an idea of whether your marketing materials are contributing to any new business you get.

7. Spending a significant amount of time in low-return activities

Don't we all know about this one! If you are spending the majority of your day completing tasks which are administrative in nature and/or which can be easily completed by other people then you are not putting yourself to best use. For most of us, the best value-adding activity we can be involved with is in bringing business in the door by building relationships, talking to prospective customers and promoting our business.

What value do you put on your time? Assign yourself a competitive hourly rate for the market and industry you work in ? it might be anywhere from $100 per hour or upwards. Then ask yourself whether you would pay anyone that hourly rate to process accounts or do administrative work. If the answer is no, find a way of getting these low-return activities done for a lower hourly rate. Hire a bookkeeper or assistant for a few hours a week, and spend your time doing the valuable work.

8. Not charging enough for what you do.

This challenge seems to arise especially for people who sell services. Either we feel embarrassed to ask for the amount we want, or we simply accept less money than we need - so we get "some money" rather than "no money". But beware, after a while, working for too little can leave you exhausted and resentful, not to mention the impact it has on your profitability.

You do not need to defend an increase in your fees either. It is normal business strategy to review fee structures, make changes and advise customers. And contrary to our fears, it is often the case that business levels improve after fees are increased. It seems that we attract a whole different class of customer when our fees reflect the value we provide.

9. Not making enough use of technology which could save time and effort.

As a business owner, you have a fixed amount of time and energy within which you must maximize your profits. Technology can help you do this in the form of autoresponders, voicemail, wireless internet connections, speech recognition software, SMS from your computer and so on. All of these tools are widely available to us, and are designed to save time and effort. Each of us needs to continually look for ways to make business processes more efficient by using inexpensive technology.

Often the problem is that we don't know what we don't know. Some wonderful tool might be available but we don't know it exists. You need to stay on top of the latest products by regularly checking in with business and telecommunications sites.

10. Sticking with outdated business models or plans.

You've all heard it before - doing things the way they have always been done means that you will get the results that you always got. If you are not satisfied with your results then you need to re-look at what and how you are doing things. An astute entrepreneur has a mindset that is always challenging the way things are done in the business.

Another great way of coming across new ideas is to attend seminars and conferences on various topics. If you get a single idea to put into practice in your business, then that seminar has been worthwhile.

If you are serious about improving your business' profitability (and aren't we all?), then taking action on these areas will help you make more money and have more fun in your business. And that's what it's all about really.

Megan Tough is a published author, coach, facilitator and speaker. Her business, Action Plus, works with professionals to create sustainable and profitable income streams. Make more money and have less stress! To learn more and to sign up for more FREE tips and articles like these, visit http://www.megantough.com

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