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10 Ways To Increase Profit Now
January 04, 2011 at 8:23 PM
Because accountancy is about more than just crunching numbers, we look at ways that small businesses can increase your profits..... right now:
1. Measure it!
If you don't produce management accounts each month to see how much money you are making (and where you are making it), you've got very little chance of truly maximising the profit in your business. If you cannot produce management accounts at the click of a button, then maybe it is time to consider using online accounting software, such as Xero. And why stop at monthly reporting? Many small businesses are measuring profit on a weekly or even daily basis. Are you?
2. Cross-sell and up-sell
Map out your customers in a simple matrix to understand opportunities for cross-selling. The biggest opportunities are often right underneath our noses and this is a great way to identify where they are. Who are the top 10 clients that you could call up today and talk to about additional products or services? Also checkout tips 60, 61 & 62 in this interesting article: 77 Tips.
3. Review your offering
Is there anything missing from what you currently offer? Why not carry out some simple research with your key customers and ask them? What would they like to buy from you? This would also be a great time to remind them about all the additional products and services you can offer. Research shows that, for most businesses, 20% of their clients would be willing to buy a premium product or service at a premium price. However, many businesses don’t offer it and are therefore missing out on easy profits. When was the last time you reviewed your offering and pricing?
4. Cull your unprofitable clients
Don't fall into the trap of assuming that Revenue = Profit. It doesn't! Conduct a review of your client profitability regularly and say goodbye to your least profitable clients. If you don't, these will slowly eat away at any profits that you make. Is it time for tough action with some of your clients?
5. Get into the billing habit
Many business give away too much time, or provide added extras without charging for it, all because they forget (or are too afraid) to ask if it is ok to bill for the extra work. Getting into the habit of asking your clients if it's ok to bill for the extra work that you've done is a really good habit to get into.
6. Target your ideal clients
Spend some time building a profile of your ideal client, the criteria that identifies them and how to target these clients. Can you identify what your most profitable client looks like (before you even start working with them)? Where will you find them and what forms of communication will they respond best to?
7. Create a sales plan
One of the most obvious ways of generating more profit is to sell more – but without a structured sales plan to work towards, this is difficult to achieve. Do you have a plan for the next 12 months? Check out Wow's guide here.
8. Get value from your suppliers
Make sure you’re getting real value from your suppliers by reviewing them regularly. Read more about getting good value from your suppliers here.
9. Don’t waste time on marginal activities
Keep an eye on what you’re spending your time on each week....... you might be surprised at just how much time is spent on unimportant tasks, such as chasing small debts or admin. Make sure you focus your time on the activities that will really add value to your business and maximise profit – plan each day, week and month effectively (and consider outsourcing those tasks that others could do).
10. What's tip No.10?
What are your top tips for generating extra profit in your business?
Add your comments here or tweet @thewowcompany. We'll tweet all your ideas and the best one will win a bottle of bubbly!
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