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Top 5 Valuable Tips to Improve Profits
Every business owner wants to improve profits, BUT what are the best practices around profit margins and an increase to your bottom line? If there was a magical formula, every company would be successful. According to Forbes - 8 out of 10 businesses fail. Many small business owners have shared the strategies they find helped them. Here are the Top 5 Valuable Tips to Improve Profits.
Stop stiff arming technology - Margins are fluid. Sometimes the best way to improve profits is to decrease expenditures. This can be done by improving process efficiency and leveraging emerging technologies. Try to find one change each quarter that will help with efficiency, many of the new technologies can add value in the form of improved accuracy and productivity. An asset is often looked at as a liability when in reality the return value far exceeds the immediate expense. This can really pay off!
Leverage your current customers - Your current customers put their faith and trust in you. Figure out what they are willing to pay more for/upgrade to. When you know they are happy and why, ask them to refer their friends. Your profits will get bigger and bigger!
Control costs - The Gartner Group estimates that a 5% reduction in operating costs can have the same impact as a 30% increase in sales. Your team that has credit cards and expense accounts should have a well managed budget. They should be held accountable to be sure they are making wise decisions on suppliers and partners. Ask the questions and compare products regularly. Continually verify your current negotiations; "trust yet verify". Streamlining and efficiently tracking the processes of requesting, approving and tracking budgets through a well organized reporting system can have a big impact on the operational costs, efficiency and stress on the workforce.
Think long term - Figure out a way to be unique and be the market leader or you will remain average and slow. Average companies fail in today's ever changing economy. Once you find your niche, market this and you will have uncovered your long term profitability strategy.
Increase prices - Seems easy; however, this can be emotional. There is always a resistance to an increase in price because if the belief "everyone shops price". Statistically, less than 20% of people shop in price. Most people make buying decisions based on value, be sure you are able to build the value. In the absence of value, people will buy on price. In order to effectively increase the price, you must take your existing product or service and add more value to what you currently offer. This can be done by asking the questions of your current customers as to what could make the product/service better. When you re-release, your product will have more value and in turn an increase in price. A unique selling proposition is very important when re-releasing.
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