Many business owners start businesses because of an interest they have or a need they’ve discovered. Often, earning an income is a primary goal but it’s not expected to occur in the early days of business development. Instead, new business owners are interested in first getting the business to operate on a regular basis: with a constant stream of customers, an advertising program on autopilot, and great service to keep customers coming back.
Somewhere down the road, the income is expected to start coming in and until that day, you usually tighten your belt, expect some late nights, and simply accept the mindset that you need to roll up your sleeves and do the work.
The money will come. Along the way, there are a few ways you can help to build a more profitable business. In the early days, it might not mean that you’ll earn more income (you might still be paying off loans, for example), but it might mean that you can pay off those loans more quickly, quit your day-job a little sooner, and earn a larger income faster.
Here are four ways to help increase profitability in your business.
1. Pull out your balance sheet and make sure you’re balancing. Don’t have a balance sheet? You need to get one! Use Microsoft Money or some other financial program to help you get a handle on your finances. Although the thought of financial statements can put many people to sleep, this critical area of your business needs as much focus as the attention you give to customers and product quality. Often, it’s your financial statements that can offer one of the earliest warning bells that there’s something amiss. For example, you might be taking whatever income you can from your business and using it to pay down some of the loans you may have used to start the business. However, a financial statement can show you that your income is not high enough to service your debt load. Without this key indicator, you’ll run your business into the ground simply trying to service your debts.
2. Google AdWords Discounter. In a previous article we spoke about the strength and opportunity of Google AdWords, Google’s Pay Per Click ad program. If you are using AdWords, you need to consider using Google Discounter, which lets you bid slightly higher than your competition so that you’ll help to ensure a higher placement in search results. For example, if your competition is paying $2.00 per click, using Google AdWords Discounter lets you bid $.01 higher, so you’ll pay $2.01 per click. Then, if your competition raises their bid to $3.00, your Discounter automatically raises your bid to $3.01 per click. Don’t worry, you can set daily maximums so that you won’t be surprised by a bill at the end of the month. You can learn more about it at www.google.com/adwords.
3. If you sell products, you can save on shipping. Are you shipping your product in the most cost effective way? Contact your post office to find out. Additionally, you can reduce shipping costs by partnering with complimentary businesses (businesses who serve the same niche but with non-competing products or services). Offer to insert their coupons in your outgoing packages for a small cost; collect enough of them to help cover the cost of your shipping (but not so many that you overwhelm your customer).
4. Save on Web-hosting. Many times, new entrepreneurs get rose- colored glasses about the immediate success of their business so they buy additional web pages and bandwidth that they may not need right away. Save your money by reducing short term capacity, then increase it slowly when you need it.
