Successful small business owners are always thinking about how to increase their earnings. When times are tough, every little bit of extra cash helps. And when things are going well, a healthy bottom line can enable you to build up an emergency fund, or even expand your business. Here are some strategies to consider if you’d like to improve your bottom line:
1. Adjust your pricing
If your sales aren't where they should be, evaluate your pricing and determine if it's fair – not only to your customers, but to you. If sales are good, but earnings are not, it might be time for an increase. Look at what competitors are charging, and consider an increase that will help your profit, but not drive customers away.
2. Cut down on expenses
Unnecessary expenses can often lead to disappointing profits. These can come in many forms: expensive office space, ineffective advertising, frivolous small purchases, inventory that's not moving, etc. Schedule some time to closely examine where you're spending your money, and then look for places to cut back. Click here for a NevadaSmallBusiness article on reducing expenses.
3. Reduce interest payments
If you’ve been in business for a while and have established good credit, you may be able to qualify for a loan or business credit card at a lower rate than when you were just starting out. Talk to your banker about your existing loans and see if they can be refinanced or consolidated. You might also consider applying for an SBA loan, which may offer a lower rate or better terms.
4. Look for new opportunities
Don't become too content in your business model. If it's working, that's great, but you should always be on the lookout for new opportunities that can help you grow and increase your earnings. It might be something directly related to your current model, or it might be something completely outside the box that you're uniquely positioned to excel in. Don't ignore such opportunities.
5. Learn to fail quickly
Business can be risky, and sometimes situations don't pan out as we hope. That's why it's important to learn how to fail quickly – to recognize early when something isn't going to work – so that your earnings don't suffer as a result, or if they do, it doesn't last so long that it's difficult to recover.
6. Work smart
As the business owner, are you trying to do everything yourself, or have you learned to delegate routine tasks to others on your team? Handing off non-essential duties to others can free up time you can use for strategic planning, investigating new opportunities, and other high-level tasks that make the best use of your time. As an added bonus, team members may appreciate the confidence you place in them, and become more invested in the company, reducing your turnover expenses.
7. Utilize the power of a mentor
It doesn't hurt to have a mentor in business. There are people all around you who have been doing this much longer, and that experience can be valuable not only to them, but to anyone who cares to learn from it. Find someone who understands what owning a business is like, and learn from their mistakes and successes. Click here for a NevadaSmallBusiness article on finding a mentor.
8. Focus your marketing efforts
Make sure you're targeting the right demographic(s) with your marketing messages. If you want to be heard and understood, just shouting out to the whole world is much less effective than tapping one person on the shoulder who might actually be interested in what you have to say. Do some research, think about who is most likely to benefit from your product or service, and then consider how to reach out to that group of people. What message would most appeal to them? Would they respond best to emails, mobile messaging, magazine ads? Click here for a NevadaSmallBusiness article on inexpensive marketing for small businesses.
9. Actively reach out to potential customers
You can't expect to just set up some marketing and advertising, and then sit back and watch the customers roll in. You have to roll up your sleeves and reach out directly as well. Whether it's cold calls, visiting people in person, or setting up a vendor booth at a local event, take the initiative to tell people directly about your product/service. Don’t be afraid to ask your current customers for referrals. People are more likely to visit a business that someone directly suggested, so referrals can be a great way to build your customer base and increase your profits. Click here for a NevadaSmallBusiness article on creating positive word-of=mouth advertising.
10. Don't stop learning
No matter how good you are at your job, don't ever become too comfortable. Never stop learning and looking for ways to improve. Times change, as do technologies. Stay on the cutting edge as much as possible. Attend industry events, read industry publications, and stay in the know.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A.