As a business owner, you know how daily decisions can add up. Think of your most successful ideas and moments—many of them started with one good thought or observation.
That's the way profit works too. Small changes can make a big difference. It can take you from survival mode to becoming a thriving organization. But how do we optimize our profit when our lives move so fast? It just takes a few simple ways to position your company for growth.
We get excited about creating products, building teams, and developing the business we have always envisioned. But it’s easy to get distracted and forget that everything is possible because of sales. It’s also a problem when we don’t utilize our people and resources for the one thing that keeps us going.
Everyone on your team should know how to sell. Zig Ziglar once said, “I have always said that everyone is in sales. Maybe you don't hold the title of salesperson, but if the business you are in requires you to deal with people, you, my friend, are in sales.” When your secretary, custodian, and anyone who interacts with people, can passionately talk about your brand, expect significant results.
As customers or partners walk through your door, you are selling something to them. The experience, interactions, and ultimate product or service is all a part of the package.
Imagine visiting a car dealership. The saleswoman is passionate about the car she's trying to sell you. That passion is expected to come from a salesperson. You aren't sure if it's the right car though and have some doubts.
But all of a sudden you pass by a shift employee stalking the shelves with car accessories. He tells you, “I saw you were looking at that car. I want you to know that I drive that same one. I love it. It’s good on gas, it looks great, and I can always rely on it. Oh, and you have to check it out in dark blue.” When all employees become fans and salespeople for your products, they can connect with others from every direction.
Increase your profits when you train your team to sell. They are ambassadors of your brand. When everyone is looking for an opportunity to sell your product or service, you multiply your company’s influence.
Consultants know that when they enter a struggling business, they will identify dozens of problems. But if they try to solve them all at the same time, the company will fail before they even make a dent.
So what do they do? They look for the jugular. What is the one thing that needs to be fixed immediately that is draining this company? In almost every situation, it’s linked to their cash flow. From there, they can solve every issue one thing at a time.
That’s how cutting expenses works too. What is the biggest area that could be improved? Review each cost and see if it can be adjusted.
- Always renegotiate
Review your vendors. Shop around to see what has changed and what is available to you. Every year, call your existing vendors and negotiate. You can save thousands of dollars. Set the expectation: tell your vendors that you are looking for partners that are growing, produce quality, and are competitively priced.
- Are you overstaffed?
Almost every business will be overstaffed at some point. You may need to decrease labor hours or staff.
Review salaries and benefits to make sure your business is healthily managing its finances.
- Can you make your process more efficient?
Less time means more money. Find out if your workplace and process is set up for efficiency.
Sometimes it can be hard to imagine how your business can be affected by changes like cutting costs. Does that small fee really matter? What’s the significance of this decision? When you utilize tools like Profit Frog, you can see the results of every scenario. Use technology and network with your business peers and team to find out practical ways you can cut costs.
This, by far, is the fastest way to optimize your profit. Cut expenses where you think your business can save.
This can be a scary step for many businesses, especially price-sensitive retailers. But raising your price, when the time and conditions are right, can make a big difference.
Evaluate your product or service. Can you improve on the quality and benefits? If you feel like you can’t raise your price, you may be able to create more value for your customers by making a change. In Good to Great, Jim Collins says, “Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice, and discipline.” When you intentionally create more value for your customers, you can justify a price increase that they are willing to pay.
“A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large.” – Henry Ford
Instead of looking at dollars and cents, consider raising your price based on a small percentage. This is usually unnoticeable on most products or services, and it increases your margins across the board.
For example, if you sell chicken sandwiches for $5.50 and want to raise the price, you can do two options. You can round it to $6. But people will notice and it will take much more work to raise it again in the future. Or you can raise it 5% (and everything else in the restaurant), making it $5.77, and your customers may not even see the change. This meets your goals and makes it easier to adjust your selling price when necessary. That small percentage makes a big difference over time.
Marketing can bring you more sales but it can also be expensive. Many businesses might be tempted to cut marketing during tough economic times even though that is when they need it the most. Regardless, it’s an area that can be very costly and weigh down the company budget, though it doesn’t have to be that way.
Consider how effective your long-term marketing tactics are performing. Think of the banner you might pay for at a local school or a billboard off the highway exit that’s been up there for years.
The best way to optimize profits by simplifying your marketing is to consider who your target audience is. If you are a B2B company, perhaps a poster at the mall’s food court might not be the best place. Or if you have a billboard in an area that’s losing its population or changing demographics, it might be time to reconsider.
Use metrics to find out where your customers are coming from. Utilize technology. Ask customers personally. Then cut out any underperforming marketing programs.
CNBC’s The Profit reminds its viewers how simple marketing and testing your products can be. In the episode Mr. Green Tea, Marcus Lemonis spoke with the ice cream company about testing out their product with customers and getting the word out.
Instead of an expensive, elaborate plan, Marcus recommended visiting a local grocery store and asking if they can set up a stand and give away free product. The grocery store welcomed the idea because they knew their customers would appreciate it. They spread the word about their brand and got real-time feedback on its quality.
Think of creative ways you can simplify marketing, target your audience (meet them where they are), and increase your profit with better marketing and more reach.
When customers already invest in your product or service, they are more willing to upgrade their purchase if it makes sense to them. Introducing the option will gain more sales for your company
Shopify reports that the e-commerce stores on their platform make 10-30% of their sales on upsells and cross-sales. That’s a huge chunk of revenue that businesses are missing out on if they don’t take advantage of a good strategy.
Create an easy upgrade for your product or service that customers will appreciate. Once you have a good upselling structure in place, design a cross-selling variety for customers willing to spend more.
Example: Does your customer want to buy your most commonly produced entry door for their house? An upselling option can be to include a decorative window at the center for a competitive price. And if they buy the entrance door, a cross-selling option can be to get a matching back door as well for a combo price.
When we organize a structure for cross-selling and upselling, we can increase our sales and considerably improve our profit.
The Pareto principle tells us that 80% of the effects of our efforts come from 20% of our input. This means that an estimate of 20% of your B2B customers is probably fueling your revenue. 20% of a certain time of the week is fueling your restaurant business. Find out who and what is responsible for producing the majority of the 80% results you seek.
When you focus on the 20%, you can cut out distractions and increase your profit.
For example, let’s say you have 100 clients at any given moment. Review them. There’s a good chance roughly 20 give you most of the revenue and work you need (about 80% of it). Imagine if you ended your relationship with the rest of your clients and focused on the 20 high-rewarding clients and added a couple more based on the same criteria. You could be making more sales and profit by consolidating to your core source of revenue.
There are many ways you can optimize your profit. These are just a few that you can start implementing today.