What would 4 easy tips look like to improve net profit in 30 days without working a whole lot harder? Read on below…
When I talk with and coach business owners, most owners early questions are around how do I increase my sales or revenues. The answer to that simple question can become quite complicated.
But if I said to you, for the same amount of hours in the business, here are four sure fire ways to improve net profit within 30 days. To me, that would be much more beneficial to your business says Business Coach. After that, we can look at the best ways to grow your revenues.
1 Stop discounting your sales
Many owners use discounts to close a sale. But, all discounts do are take revenue off your top line, and 100% of that discount comes off your net profit. Your running costs remain the same, your costs to buy the goods remain the same, and the staff get paid the same wages.
In my blogs, I talk about growing net profit and giving a discount to your sales price is one way not to do this.
How to avoid giving a discount – it’s all in your approach to sales and “why” the customer is buying. If you have worked out the “why”, you may find usually it’s not price related. If they are ready to buy, they are educated as to your product/service – the benefits, and what problems it solves. The sales role within your business is to round off that education the buyer needs to conclude a sale. The better the education, the better you understand your customer’s needs, the less need to provide a price discount.
2 Online advertising
Review your revenue generated from online advertising.
Your business has joined the social media push, and perhaps you are running Facebook adverts or using Google Adwords. But are you clear on ROI (return on investment, the $ you invest in marketing, and the cost of each lead and/or conversion to a sale)?
Your marketers are telling you to spend dollars to testing ads and which ones respond the best. And then there is a probably a monthly management fee on top.
Unless you can identify “why” a customer buys, then online marketing is either an investment into research (to find out why), or your lead/conversion rates are low, meaning a big spend to generate real sales revenues. And if you are not clear on benchmarks for ROI, then you are spending blindly.
Optimise your online campaigns by first talking with your customers and understanding why they buy. Use this information to create the purpose of your ad campaigns. In the meantime, reduce your spend on online advertising until you sort this out.
The majority of small business owners use their home as collateral for business finance.
There is plenty of noise in the market place about how banks love new customers but for long standing customers, you just a number.
So a refinance could be just like for like, based on better rates alone. Don’t know where to start and your time poor? Perhaps talk to a mortgage broker (brokers get paid by the financier as a rule), but pick a broker who acts for a wide variety of lenders so they can give you an idea of some options, rates and terms. Identifying what funding you need for future growth and making sure why and how you will use any additional funds should be part of your planning/research process.
So, if this is you, test the market by getting some quotes from a new lender or broker. Generally, it will equate to more cash in your pocket. And if you think changing banks is a hassle, then run your numbers and work out the annual cash saving – can you afford not to refinance your loans?
4 Use Scorecards
As a business coach, I use scorecards consistently with all my business owners.
Why do scorecards work? Well, it seems that people act in a certain way when they know the boss is looking. If it is important, then the scorecard is a formal way to remind your team that the number or KPI is important to you, the business owner.
Pick say three things that are important and that would make a difference to your business’ net profit. Talk to your team about it. Then create a scorecard and place it publicly for all to see (make sure it is large enough to be noticed!). Verify that the goal is the action/process that if achieved, will add dollars to your bottom line.
PS: you can do the same for yourself by just writing down some 30-day goals, sticking it on a wall, and reviewing your actions towards those written down goals at the end of each month.
Optimising your business and its net profit is a process that takes place over an extended period. Many business owners make a change without understanding or predicting the impact of the modification. Sometimes the changes work, and sometimes they don’t. But the ones that don’t can become very costly.
Let me know when you have made a change to improve your net profit and what was the outcome. Was it the outcome as you predicted?