Small businesses face competitive environments and have to deal with constant disruptions. To thrive, small business owners need to create processes that help them increase their profits over time.
According to SEMRush, 66% of small businesses report facing financial challenges, and 43% claim paying expenses on time is the most significant challenge. In the light of such statistics, it’s clear that small businesses need to brainstorm ways of boosting their profits.
Here are 4 ways in which small businesses can increase their ROI and ensure their time is well spent.
REVIEW YOUR PRICING STRATEGY
Pricing is a tricky topic, and there’s no single right way to go about it. Any increase in prices will contribute to profits, but it might lead to lower sales volumes. You also risk displeasing your customers, which might lead to lower revenues down the road.
Begin by examining the value drivers your customers adhere to. A good way to do this is to directly ask them what they believe is an expensive, cheap, and borderline expensive price. Placing yourself just below the third category will result in your charging the maximum possible price you can while leaving your customers feeling that they’ve gained something of value.
Make sure you ask your customers clear questions and don’t give them too many options. For instance, if you ask them to rate their feelings on a scale from 1-10, you’ll end up with a mess since people evaluate the emotional impact behind those numbers differently.
Instead, limit them to 3 options, and you’ll gain more clarity. It’s also helpful to review your supplier contracts to check whether you can squeeze any more margin out of them. You don’t want to destroy your supplier relationships, so always pursue a win-win strategy.
UNDERSTAND YOUR TIME
Time is all-important for a small business. As an owner, you won’t have much time to deal with tasks, and your resources will be considerably stretched. Managing your time is essential, and this is why you must install a time tracking system.
Have your employees log what they’re spending most of their time on, and you’ll figure out where time leaks occur. For instance, you might find that unscheduled visits and unexpected events account for many challenges since they disrupt your regular workflows.
In such situations, it’s often best to use an online scheduling tool that can help you communicate your availability to customers better. For example, you can reduce cancellations with online scheduling and timely reminders for appointments.
Needless to say, the additional time tracking you’ll implement will rub some of your employees the wrong way. They’re likely to view it as micromanagement. You need to assure them that micromanaging them is the least of your aims and that the entire exercise is about ensuring that your business’ time is well spent.
By accounting for your time better, you’ll be able to spend more time in activities that increase your profit margins.
PRIORITIZE MARKETING
Marketing is more important than ever before these days thanks to the intense competition. More businesses are online than ever before, and this means you need to be present across social media and have a credible web presence.
Many small businesses neglect their website design and social media accounts because they believe that foot traffic will remain high no matter what. This might be true for the moment, but there’s no doubt that more consumers are researching products online than ever before.
Neglect social media, and you might be nailing a coffin on your business. Make sure you maintain your brand’s image consistently throughout your online channels and interact with your customers. Consumers prefer dealing with companies that present a human face, so you must come across as personable on your social media accounts.
Prioritize channels that are bringing the best results for you and always measure the key metrics that drive sales.
INVEST IN PEOPLE
Your employees are the best resources you have, so make sure they’re happy and cater to their needs. Prioritize recruitment and seek to attract the best candidates possible. It’s helpful to simplify clerical tasks such as expense reporting and payroll to make sure your employees face the least bureaucracy possible.
Offering training programs and other financial support such as continuing education programs is a good idea if you can afford it. At the very least, make sure you’re doing your best to ensure the workplace is a happy one and that your employees’ needs are being met.
Offer your employees clear career growth paths that will help them remain engaged in the workplace. After all, no one wants to remain stagnant.
BETTER PROCESSES FOR GREATER PROFITS
Every business is a collection of processes. The better they are, the greater is your chance of making more money. Focus on these 4 tips, and you’ll hopefully manage to increase your profits and safeguard your business through tough times.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
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