How To Tweak Your Business For More Profit
Lack Of Customers
Need more customers? For some businesses, lack of customers is a big issue.
When this is the problem, it is crucial to really get clear on the type of customer that you want to attract and build a profile of their characteristics – what they are like, what their interests are, their age group, gender, income level and more.
The more you know about your customers the more clearly you can identify others who are like them and pitch your marketing in a way that will excite them.
But even before you do that, spend the time to analyze the potential of the sales your product is capable of delivering.
For example if you are selling a service then you must know how many hours you have available that you can ‘sell’ each week and the rate you can reasonably charge. Is this price and the hours available for sale enough to cover your fixed costs, plus provide an income?
Remember that there are many other things you need to do to run your business apart from those client-facing times. Not billable, they still need to be done. If your time with clients is not enough to cover expenses and pay you too, you may have to choose to do more client hours, increase your price and be able to sell it at that rate. Or you might need to add more products that don’t require your time. These products can be made available for sale without taking away from your on-on-one client time. Downloadable ebooks, or courses for sale, may be a solution.
Plenty Of Customers Not Enough Sales
Other businesses may have plenty of customers but no method to activate new sales. More frequent repurchase may be the answer.
Growth doesn’t necessarily mean more customers. More profit may be a better goal.
Is there spare capacity within the business? That is to say, is there scope for delivering more product or is the business struggling to cope with the existing workload?
Sometimes the solution is not more customers, nor more sales, but more streamlined processes so that delivering the product is easier or less labour-intensive, or the business can produce more sales with the same resources.
Better scheduling, regular and ongoing marketing processes would be examples.
Pricing is another area where profitability can be improved. Buying better can mean more discounts on inventory purchased, or better shipping rates, or packaging up several products for customers to buy at a good price, can be a way of lifting profit or the average dollar value of sales.
Document Your Positions
Does the business have roles and responsibilities written down?
Many small businesses don’t have a good system for this. By getting this right, you can more easily hire the right people for the job, know what to train them in when they start, and be able to appraise their performance and manage employees more effectively.
Much time is wasted by not doing this right at the start. It is the old adage of ‘sharpening the axe’ before you begin the job. A little preparation can save a lot of time on the way through.
1. Your Offer
2. Your customer profiles – you may have more than one category of client
3. Tailor your marketing to speak to the wants of the customer
4. Written roles and responsibilities – and to whom they report!
5. Keep a database with all your dealings with customers updated
6. Calculate the Lifetime value – how much do they spend with you over a 5 year period? This will show you how much you can afford to spend to acquire new customers.