Everybody wants to make more money. And since money often equals success for many people, that means we’re always looking for new ways to earn more. For small business owners, this is especially important, since the longer a business stays viable, the longer it can keep the doors open, retain staff and be successful.
But aside from a price hike or a rate increase, are there other ways a small business can increase its profits? There are actually numerous ways—scaling both large and small—that a small business can increase its profits. Whether that profit comes from earning new revenue or freeing up some costs, here are 10 of the more simple ways to do so.
1. Go Paperless
Not only does going paperless have the added benefit of being good for the environment, but reducing your business’ reliance on paper makes things a lot cheaper. It’s not necessarily important to cut out paper entirely, but making a more concentrated effort to cut down on the amount of paper you use can help. Cutting down on paper costs also extends to costs associated with paper, including printer toner, maintenance as well as things like binders and storage cabinets.
Tip: If it doesn’t have to be on paper, then don’t put it there. Make sure that all of the necessary documents at your office or facility have been properly backed up, and then start emptying file cabinets and prepping documents for recycling or shredding. Once all of those file cabinets are empty, sell them to a second-hand office furniture store and pocket the cash, or donate them to a charity or school and use it as a tax write-off.
2. Switch to Electronic Forms and Filing
This tip goes hand-in-hand with number one. Even if you don’t go totally paperless, it’s possible to replace your missing paper with electronic forms and filing systems. Think of the savings if you were to start emailing invoices to clients and vendors, or simply taking electronic payment. You could cut back on postage fees, envelope costs, paper costs and more. It can also cut back on administrative duties, allowing your employees time to do work that more directly impacts your bottom line.
Tip: Make sure that your chosen electronic filing system is secure and customer-friendly. Whether you’re using online HR forms, inventory management or accounting software, you want something that is efficient and convenient.
3. Evaluate Your Current Software and Shop Around
Consider the software you’re currently using and if switching to another vendor or program might a) save you money or b) give you more for the money you’re spending.
This step could generate significant cost savings if you’ve never taken the time to really evaluate the programs you’re using. Can you save money by moving to a newer version or service tier? Or does a competitor’s offering seem like a better fit for your business than it was a few years ago? If the answer is “yes” to any of these questions, you could save some serious cash.
Tip: This analysis might take a little time, but the long-term savings can be significant. remember that you can always use an offer from one vendor to negotiate with your current vendor.
4. Convert Your Leads Into Paying Customers
Depending on how full your sales pipeline is, it might be time to make a push to convert some of these leads into paying customers. Task your sales team with closing outstanding deals or offers that have been languishing. Or offer a special deal for first-time customers, and make it even more enticing for them to try out your product or service.
Tip: Conduct a month-long sales push with incentives for your sales team that revolves around closing deals with new clients or upselling current clients. Sometimes the monotony of sales needs a bit of a shake-up, and incentivizing sales above and beyond the norm may reinvigorate your bottom line.
5. Bundle Products or Services
Bundling works if you offer products or services that naturally fit together. For example, an advertising agency might bundle together its ad-creation services with media planning and post-campaign analytics. The point of bundling is to give the client a slight discount while increasing your profit per client.
Tip: Be careful with the language you use when putting bundles together. While telling clients they are getting something for “free” (i.e. you’re paying part of the cost instead of the retail buyer) is definitely one way to get their attention, it can also backfire in the long-term. Charging for something that was once free can irritate customers to the point that they won’t come back. It might be better to simply say you are giving the client a deep discount or preferred pricing on the other services.
6. Offer Maintenance Contracts or Retainers
Depending on your business model, charging clients an ongoing fee for maintenance contracts might be a great way to generate steady income. A retainer model, which is typical in the legal profession, might also work for your service business.
Tip: Locking clients into long-term retainers without a way out can be seen as unethical. Clearly outline what your client can expect for the retainer fee, and consider offering other discounts for longer-term contracts.
7. Expand to a New Geographic Area
It’s possible you’ve saturated your local market and tapped it out. So why not expand into another market? Added costs must be considered, including supporting remote sales reps or ultimately converting new leads to paying customers. The long-term benefits of expanding your market geographically, however, may be hard to ignore.
Tip: Examine your target market before engaging it. It might be best to identify target clients or businesses in the new area and reach out to them first, as opposed to doing a general marketing or advertising push. By strategically entering the new area, you might find it easier to convert clients and/or sustain sales.
8. Talk to Your Vendors
Ask your vendors if they offer discounts for paying in full upfront or before the actual deadline. It’s possible you could get a 2% to 5% savings on vendor fees. Besides, it doesn’t hurt to ask. Also, ask about bartering for goods and services. A mutually beneficial working relationship can save both companies money while allowing each to leverage their business’ competencies.
Tip: Approach any bartering situation with the mindset that you can provide something of benefit to your potential partner. It’s easier for them to see the value if the solution is framed up to highlight what they’ll get out of it, not what you will.
9. Ask Your Employees for Input
Many business owners know this, but your employees are a treasure trove of information. Chances are they’ve already thought of ways to cut costs or increase revenue and simply haven’t mentioned it because no one has asked. You’re not the only innovator in your organization. Leverage the talent you’ve hired.
Tip: If you do ask employees for input, make sure to respond to their suggestions. Make sure to acknowledge employees who have offered solutions—and this is important—even if you don’t use them. Doing so ensures you’ll continue to receive employee feedback the next time you ask for it. If you do implement an employees’ idea, celebrate it! Get their permission first, then make a big deal out of the fact that Bob and Sally are innovative thinkers who are helping your organization.
10. Enhance Your Current Marketing Collateral or Advertising Efforts
Maybe it’s time to revisit your marketing materials and/or your current advertising. Based on the market and your customer demands, your marketing materials might be outdated, and adding a fresh spin, even to just the language might open up new opportunities.
The same can be true of advertising. It’s possible you’ve gotten all the mileage you can out of your media type or outlet. Move those dollars somewhere else, perhaps to search engine optimization or a redesign of your website.
Tip: Don’t stop your advertising completely. There is nothing wrong with revisiting your current media plan and asking for input on where you should spend that money. Some of that advertising money could go to dues for a professional association or attending a conference to open up new avenues and make new connections.
In truth, increasing your revenue is often a combination of lowering expenses and increasing sales. However, you can make slight adjustments in many different aspects of your business to effect positive change. For more tips on increasing profits, check out our article on eight ways to increase cash flow and lower expenses.