Although many of us hoped that the market would have stabilised by now, the reality is that business owners still find themselves in difficult times. From talent shortages and increased complexity in manufacturing and logistics, to the continued after effects of COVID and cost of living increases impacting customer spending, businesses still face a full gamut of challenges!
As we all look towards achieving long-term success, maximising profit has become more important than ever before. But since, as now infamously stated by ex-Great Britain Prime Minister Theresa May, “There isn’t a magic money tree”, how do we go about making more money in the midst of disruption?
Like it or not, we are living in an increasingly digital age! People are spending more and more time online, both inside work and out of it, so it’s important to meet people where they are. We appreciate that some of our clients are still comfortable with their traditional methods, but as new processes such as the recent switch to Combined Employer Returns (CER) are introduced, we all need to embrace change to make our lives easier! From traditional social media to entering the metaverse, targeting potential customers in the digital space can deliver high returns for relatively low cost.
But remember that the online world is very similar to the offline one – people hang out in different places depending on who they are, what they do and what interests them. Before committing to a digital strategy, you first need to figure out who your customer is and where they are. Do they network on LinkedIn, or are they looking for quick fun on TikTok? Do they click on ads, or do they prefer to engage with brands organically?
It takes a little work, but when you have it figured out, digital can help you find more customers, retain existing ones – and sell more easily to all of them.
Increase The Value of Your Customer
You’ve done the hard work, you’ve convinced a customer to buy from you. So it makes sense to maximise that sale as much as possible. That’s where cross-selling and up-selling comes in.
We’ve all seen (and possibly been annoyed by!) the ‘did you forget this’ or ‘have you seen these’ offers when we’re trying to pay for our online shopping, but the fact is – it works! What used to be called old-fashioned ‘impulse purchasing’ in bricks and mortar stores has now been translated into online too; and exploring the potential of bundles, promotions and upgrades to higher margin sale items are strategies that can be utilised across both products and services.
Analyse Your Costs
Outgoing costs have the potential to make or break a small business, so it’s essential to keep a close eye on them. Just as we would sit down at home and look at how much we’re paying for utilities, the same should be done for our business suppliers. What are you paying for manufacturing, shipping, marketing? Can you negotiate better deals, source cheaper suppliers?
Staffing is often a business’s largest expense, but having staff can also be your biggest asset and you might benefit more from ensuring you are using your people in the best, most effective ways before jumping into cutbacks.
It’s easy to overlook the importance of making efficiencies to profit margins because it’s often not instantly apparent. But once those efficiencies are in place, it won’t be long before you see the impact of them on your bottom line.
Automating repetitive processes or tasks, having the right tools or technologies in place, improving internal communication and working to a clear and defined strategy are all ways you can introduce efficiencies into your small business.
It might sound counter intuitive, spending money in order to increase profit, but there is an increasing wealth of research to prove the link between strong supplier relationships and greater profit. Working with an expert can bring ideas and innovations you had never considered, and free up your time, so you can focus on strategies for success. It can motivate your team by reducing their daily grind, and introduce you to game changing new technologies, trends and support networks.
And since we’re talking about finances, a great place to start is by working with an accountant *wink wink!*. As I’ve illustrated above, the incomings and outgoings of a business can be complex, nuanced and have a fundamental impact on longevity and long term success.
We’d love to talk to you more about it. Book a discovery with one of our experts, and find out how working with a strategic partner on your finances can help you to create a more productive and profitable business.