A Guide to Growing and Increasing Your Profits
As a business owner, producing a business plan was no doubt one of the first things you did when you decided to set up a new company. Initially, you probably began with some market research to determine the demand for your new business idea and you probably also established some business and personal goals.
Ideally, you should revisit your business plan every year. You should check it is still in line with any changes in both your personal circumstances and the business environment. Furthermore, you should update it when necessary and if you have completed any goals.
The most important reason for reviewing and revising your business plan is to make sure you are still competitive and able to move forward to accomplish your long-term goals. It’s paramount to reflect on what’s happening in your sector and how well you are performing.
Increasing Customers & Sales –
Most businesses have two types of customer – existing ones and new ones. It’s a well-known fact that it takes a great deal more effort and resources to acquire a new customer than it does to retain an existing one.
With obtaining new customers comes the cost of both fresh effort and money spent on marketing or lead generation. However, every business loses customers over time, clearly reducing the occurrence of this can be a more efficient way of maintaining a full customer base. This would then result in reduces costs and increasing profits.
Retaining Customers –
- Quality – Or at the very least value for money. You can also create a higher perceived value and quality by communicating this to new or potential customers. This can be done through advertising and marketing.
- Consistency of service delivery – The service standard you set must then be delivered on every occasion. If you fail to deliver upon what has now become a customer’s expectation, they will lose faith and look elsewhere for the service.
- System – The best way to provide a consistent service is to have a standard system in place which can be easily followed.
- Provide what the customer wants – This always delights customers. To deliver effectively businesses must build close relationships with their customers.
Generating More Sales & Selling More Frequently –
- Loyalty Cards – This provides the customer with the incentive to keep returning in order to earn more points which they can use for future purchases.
- Offers – Advertising and showcasing cut-price offers, which could also have limited availability, often increases sales.
- Vouchers – With an expiration date this often increases the amount a customer will buy within a particular time-frame as they benefit from a reduced price.
- Bundling – ‘Buy product X and get product Y half price’. This is a great way of selling slow-moving or excess stock.
- Trade-Ups – This can include strategies like charging customers an extra amount for extras. For example, coffee shops charging an extra 50p for a large cup.
- Impulse Buys – These are products often placed by the tills or pay point as an attempt to entice customers into adding a little something extra to their basket.
Key Performance Indicators and Monitoring to Improve Performance –
The business plan, which we have mentioned, lays out your plans, goals and objectives for the business and over what time frame they will be achieved. However, in order for this to be effective in generating profit for the business, long-term business targets need to be broken down further.
Therefore, weekly and monthly targets should be established. These can include sales, profits and cash flow targets. This allows for performance to be measured and compared, then related back to your long-term goals.
A good way of doing this is to break into key performance indicators. These are measurable values that demonstrate how effectively a company is achieving business objectives.
For example, one of a coffee shop’s main, long-term objectives might be to decrease costs. Therefore, they may highlight KPI’s that include improving the amount of recycling, reducing waste and improving efficiency amongst staff. These would then be measured and related back to assess how close they are to achieving their initial, main goal.
Getting the Most from Your Team –
Having the right team that’s well-motivated and of the right calibre, is essential to the success of your business. Every member of your team has an impact on the efficiency of the business, and therefore on your ability to make and to increase your profits.
Having a mission and vision that your employees can relate to and be motivated by, clear job descriptions, clear objectives and targets and suitable incentives are all good ways of achieving good team-management.
Understanding your staff is also of great importance. For example, some would argue that low-skilled workers need to be managed in a more authoritarian manner. Whilst, high-skilled workers should be given more autonomy and responsibilities with low intervention from management.
Whatever you decide is more suitable is great, but remember that always treating your staff fairly is more advantageous than treating them like a disposable unit of production. Creating a corporate culture that motivates all employees top-down is important to increasing profits.
These are just some of our ideas on how you and your business can increase profits. For more on business growth make sure you check out the business growth section at business-helpsheets