Before we dive together, here’s a question….
Would you rather a business turning over $10m (but loses money hand over fist) or a $500,000 business that generates $200,000 profit a year?
If we talk top line only (and forget profit), the business taking $10m in sales probably sounds “more appealing” than the $500,000 business.
The challenge is, I see lots of businesses that take in lots of revenue yet struggle to pay their bills each month.
With this in mind, consider that sometimes, top-line numbers get thrown around for ego, which is why profit is what you and I are working on today.
I’m interested in two things:
#1: The level of joy a business brings you.
#2: How much money you get to keep after expenses (profit).
Shall we walk through some ideas that can put more money into your pocket each financial year?
AN INVITATION TO EXECUTE
Strategies are great, but the catch is you need to implement and measure each idea to see the results.
Get a pen and paper – it’s time to get work!
Feel free to start implementing one and layering in others as you progress.
PROFIT INCREASING STRATEGY #1 INCREASING TRANSACTION SIZES.
This action is often the most overlooked strategy for increasing profitability.
When was the last time you increased your fees, rates or prices?
This simple step alone instantly increases the margin on every sale.
So put your rates up.
A strategy could be to introduce packages, up-sells or add-ons with more tangible or perceived value built-in.
This approach can turn infrequent or one-off transactions into larger sales and in many cases, become more appealing to long-term customers.
PROFIT INCREASING STRATEGY #2 INCREASING PURCHASE FREQUENCY.
By simply having systems, such as direct debit, subscriptions, on the spot re-booking, email/SMS follow up you can encourage existing clients to re-buy more often (the margin on each additional sale is your profit increase).
Too many businesses allow the customer to remember to re-buy, come in-store or re-order (don’t take this chance).
Here are some ideas:
Is it feasible to have a receptionist or team member follow up with clients/customer at defined intervals when due to re-buy or haven’t purchased in a while?
I recommended automatically scheduling the next order/appointment on the spot after each purchase and asking for a referral.
A product could go on auto-ship and direct debit at appropriate intervals to match average customers usage (this also saves the hassle of re-ordering).
A further option is a rewards system that encourages customers to buy more often in exchange for incentives.
Consider one or more of the above ideas to increase purchase frequency from existing clients or at the point of sale.
PROFIT INCREASING STRATEGY #3 JOINT VENTURES & STRATEGIC PARTNERSHIPS.
Joint ventures are one of the fastest ways to add new client streams in a rapid timeframe.
So, are there any businesses with the same clients not in direct competition that you could potentially partner with?
This relationship is a $0 marketing spend strategy that drastically lowers your cost per customer acquisition, thus putting the saved money back into your pocket in the form of profit, plus acquiring the profit margin from each new sale.
Could you approach a complimentary local business to discuss a win-win referral arrangement or referral fee if necessary?
Can you perform a search on LinkedIn or Google to find potential partners in the local area by industry or business type, creating a list of targets?
Just one relationship might open up a whole new lucrative ongoing client stream for the business.
For example, a real estate agent could partner with a mortgage broker, a gym could partner with a health store and so on.
PROFIT INCREASING STRATEGY #4 INCREASING SALES CONVERSION.
What if you just focused on optimising conversion?
If you refine your sales process and boost the average conversion %, it can create instant profit.
For example, if you can increase closing from a 10% to 20% conversion, this is a 100% improvement without spending additional money.
Maybe it’s possible to increase your website conversion by changing the page layout, headline, copy, check-out process or offer?
This strategy means traffic can stay the same, yet sales will instantly increase if conversion improves.
You could add educational steps to your sales process that increase a prospect’s trust, product/service benefits knowledge before the sales conversation.
By having a greater online presence, prospects can perform deeper research, becoming more informed when they reach out to make a decision.
Remember increasing conversion doesn’t necessarily require more marketing spend, it’s simply optimising existing processes to generate a higher ROI.
PROFIT INCREASING STRATEGY #5 AUTOMATION.
Are there manual tasks in the business you can eliminate or automate?
Find areas in your business that take up manual labour costs and use software or technology to automate these processes (thus putting the saved labour costs back into your bank account).
Is there paperwork you can take digital and get fulfilled electronically?
Are there communications you can automate with email systems or SMS?
Can you use offshore labour at 80% of the cost to perform admin or low-value tasks?
Start auditing your processes to see where you can find a more cost-effective solution.
Identify one or more of the fives strategies to implement with the team.
Add it to your list of strategic priorities for the next month.
Delegate the outcome to a team member responsible for the implementation (it may be you).
Test and measure the performance.
WHAT TO DO NEXT
I trust one or more of these strategies will add additional profit to your bottom line in the next 30-90 days!
If this post was helpful, then why not share or recommend it to someone else?
Let me know if I can help with any of these strategies by posting questions in the comments below (or DM if it’s personal).
What was your biggest takeaway?