It’s all about the profit. Sure, we want to do something we love, get out of the “rat race”, and make customers happy. But we can do those things without owning our own business. Business ownership at some point needs to come down to earning a profit. That’s not meant to sound greedy, it’s meant to be a reality check. Are you running a business or a non-profit organization?
Profits can be elusive if expenses get out of control or if we’re in a highly competitive price war against other service providers. The combination of high expenses and low income results in zero profits and yet the pressure on entrepreneurs to spend more and shave prices is massive.
Here are several ways to start building profits back into your business:
- Don’t sell just one product. Have a core of products that you can cross-sell to your customers. Add a section in your online shopping cart or train your staff to say to your customers, “Hey, you’re buying this? You may also want that.”
- Add peripheral products and services to super-size, upsell, and offer as ancillary products. These should earn a better cost-to-profit ratio for you but still provide perceived value to your customers.
- Package several of your products together into a “basket.” You’ll decrease your expenses by buying more at once and by delivering several products all together. And you’ll increase your income because someone might purchase a basket of products if they see that a majority of the items in that basket are things they want.
- Offer additional warranties to your customers. The electronics industry has been doing this for years and basically earning pure cash.
- Separate yourself from the pack. Stop competing on price and instead offer quality. Make your higher cost a marketing point by demonstrating how the cheaper providers offer lesser service.
- Increase sales with a powerful guarantee, like a 150% guarantee (or whatever might be appropriate and slightly excessive in your industry). This guarantee could tip the scales for a number of reluctant shoppers. Just make sure you wow each one of them.
- Find several non-competing businesses who sell the same product (or businesses who offer the same product to a different niche or in a different marketplace) and join a consortium or co-operative of buyers to drastically reduce our price.
- If you’re online, develop an affiliate sales program. If you’re offline, find independent salespeople. Pay both a generous commission to market and sell your products for you. Your per item profits may drop slightly but if there is any room at all, your over-all profits will increase.
- Generate repeat business, not necessarily through a loss leader but through great service that invites people to return. Avoid sale after sale after sale because reducing your profits will generally put you at risk.
- If you have additional resources, sell or rent them. This may be “non-core income” but it can still add to your bottom line. Got a department that doesn’t have a full workload? Hire them out to someone else’s company. Got a delivery vehicle that doesn’t get used as often as you’d like? Offer it out to others for a fee.
