Businesses with 20 or fewer employees make up an impressive 89% of all businesses listed in the US. While smaller enterprises are undoubtedly important, they are also often the most heavily impacted businesses in times of high inflation, recession, and economic downturn.
If you’re a small business owner looking to improve your profit margins during challenging times, you’ll be glad to know there are plenty of ways to streamline your finances and ensure your business’s growth and long-term success.
Here are our top 50 tips for improving your bottom line.
1. Re-evaluate Your Pricing
One of the most effective ways to expand your profits is to increase the prices of your products and services.
Bear in mind that if you increase your prices too much, your sales could suffer. So, do your research to ensure that your customers will be willing to pay extra for what you offer before you implement a new pricing strategy.
2. Assess Product Seepage
Unfortunately, product seepage and theft affect many small businesses, leaving them with less money at the end of the day. Keep an eye out for employee theft, and you may be able to increase your profit margins.
3. Reduce or Remove Discounts
Discounts are a great way to build customer loyalty. But if you are offering too many, it could be impacting your bottom lines. Try reducing your discounts or temporarily halting them to strengthen your finances.
4. Ask Vendors for Discounts
Many vendors are willing to offer discounts, especially for bulk orders. The more discounts you can secure, the more money your business will be left with to invest in other aspects of its operations.
5. Negotiate Beneficial Payment Terms
Your vendors may also be willing to offer you lenient payment terms, offering you discounts if you can pay within a stipulated time frame.
Paying later can help to streamline cash flow, while paying sooner could secure you discounts that will enhance your profits.
6. Outsource to Freelancers
If you need a specialist to handle your business’s finances or marketing but can’t afford to hire full-time professionals, outsourcing the work to a freelancer could help you to get the ROI and results you need without extra monthly payroll expenses.
7. Build Your Brand
Building your brand’s identity and recognition through marketing, both online and in the real world, will help you to stay competitive in your industry and get your products and services noticed by the right target audiences. This means higher sales figures and more profits for you.
8. Minimize Waste
Waste can be a hefty expense, whether it pertains to your office operations, manufacturing techniques, or energy usage.
Reducing your waste when it comes to paper, office equipment, ancillary products, and packaging can help to lower your recurring expenses and shipping costs.
9. Package Products Carefully
Product breakage and wastage can cost your small business money, it may not have to spare. Be sure to choose the right packaging solutions for every product you sell to ensure that they arrive at customers’ doors in great condition every time.
10. Expand Your Product Portfolio
Expanding your product range can significantly improve your profit margins, provided that you stock products that your customers genuinely want and need.
For instance, a small skincare business could branch out into selling cosmetic products to diversify its income streams.
11. Nix Poor-Performing Products
While we’re on the topic of product ranges, you can boost your profits by removing poor-selling products from your portfolio and focusing your efforts on your best sellers instead.
12. Investigate Recurring Revenue Sources
Businesses that can sell products or services to their customers reliably every month can bank on a regular and consistent income stream.
13. Seek Out Small Business Grants
There are many government and private organizations that provide financial grants to small businesses to aid in their growth. Research grants available in your industry to see if your enterprise qualifies.
14. Minimize Staff Turnover
High employee turnover rates can cost small businesses plenty of money in the long run. Get to the root of your high turnover figures and find out why your staff members are leaving before addressing these issues to ensure that your team feels supported and satisfied at work.
15. Make Full Use of Your Talent
Talent refers to the motivated and capable members of your team that help to drive your business forward. Identify high-performing individuals and their strengths and abilities, and place them in positions in which they can provide maximum value to your operations.
16. Highlight Your Products’ Benefits
Customers are persuaded more by the benefits your products offer them than their features alone. Highlighting the benefits of your products tells your target audience exactly how your offerings can meet their needs and address their pain points directly.
17. Try Scenario Planning
Scenario planning can help to make your business more resilient against unexpected obstacles, like operational disruptions and economic downturns.
18. Enhance Your Sales Strategies
If you want to improve your bottom lines, focus on expanding your sales efforts by increasing your marketing budget, hiring more sales professionals, or granting discounts and special offers to customers who make ample or frequent purchases from you.
19. Slash Your Expenses
Reducing costs is one of the most obvious ways to maximize your margins. You can do this in many ways, including finding more cost-effective suppliers, moving your operations online, outsourcing work to freelancers or low-cost regions, and leveraging digital asset management tools to take care of tedious manual work.
20. Increase Productivity
You can boost your business’s productivity by using time tracking and automation software to help your staff members work as efficiently as possible. This will allow your business to grow while keeping your costs to a minimum.
21. Streamline Management
Keep your business expenses low by ensuring that you don’t have too many managers on board.
22. Divest From Some Customers
Customer divestment allows you to terminate your relationships with customers who are not profitable to you and do not support your business’s growth.
Work with your marketing and sales teams to identify these customers, thank them for their support, and recommend alternative solutions.
23. Create a Customer Experience Plan
A customer experience plan is an essential tool for providing your customers with a memorable experience that will keep them coming back.
24. Train Your Managers Well
Training your managers to be supportive and empathetic coaches can help to slash your staff turnover rates and boost your team’s productivity, thereby enhancing your profits and overall efficiency.
25. Keep Employees Inspired
Keeping your team motivated and inspired will have them rallying to work with you to help you reach your goals. Motivate them not only with fair salaries, bonuses, and benefits but also with recognition and praise for work well done.
For instance, using a corporate accommodation booking platform to offer diverse accommodation opportunities for employees’ business travel can be a valuable part of the recognition process. It simplifies booking and enhances travel personalization, therefore making the whole process easy while saving time and money. It’s a win-win scenario for both the company’s ROI and the personal well-being of the employees.
26. Scrutinize Your Business Model
Is your business model designed to drive sustainable growth in line with your customers’ needs? Work with your team to develop a model that benefits all parties involved.
27. Improve Your Operational Efficiency
Many small businesses lose money through lost energy, time, and opportunities, worsened by a lack of clear goals, roles, systems, and expectations. Optimize yours to minimize your losses.
28. Overhaul Your Company Culture
Your business needs a healthy culture and effective leadership to thrive financially. These two factors work together to keep your employees engaged and productive, allowing you to stay afloat even during difficult times.
29. Expand Into New Markets
Attract new customers and expand your revenues by entering into new geographical markets or targeting different customer groups.
30. Take Advantage of AI
Artificial intelligence and automation tools can help you to improve every aspect of your operations, from customer relationship management and accounting to WIP inventory management and logistics. AI can also help to analyze data that drives data-led decisions.
31. Take Out a Loan
Does your business need an immediate cash infusion to support its goals and expansion plans? Approach a bank or financial institution and apply for a business loan.
32. Invest in Cutting-Edge Technology
Enhance your business’s efficiency by buying new software and hardware and automation tools and hiring more IT and tech employees.
33. Set Clear Goals
Create clear, defined goals for how you aim to increase your sales, revenues, and profits. Use this detailed plan to approach your goals in an incremental way, and to motivate your team to work towards reaching them.
34. Raise More Capital
Increase your earnings by raising capital. You can do this by selling debt or equity to investors, or taking out a financial loan. The extra money will help you to finance expansions, hiring requirements, and new product plans.
35. Focus on Repeat Customers
Building relationships with your loyal customers is a great way to keep them returning. Keep in regular contact with these customers to remind them of your brand, update them on new products and services, and notify them of any special offers that are available.
36. Re-Target Past Customers
It’s often more cost-effective to re-target past customers than it is to bring in new ones. Create a marketing plan to target former customers with specific incentives like discounts and free trials to remind them of your business and gain valuable referrals and testimonials.
37. Bundle Products and Services
Create product or service bundles to encourage your customers to buy more from you with the incentive of saving money. You can market items as a set or offer discounts to clients who buy specific items at the same time.
38. Offer More Payment Options
You may be able to boost your profits by offering new payment options that are convenient for your customers to use. This can include bank transfers, credit cards, cash exchange, secure quick pay methods, eWallets, and even cryptocurrency payments.
39. Offer Delayed Payment Plans
Lay-bye programs and installment plans allow your customers to pay off their purchases from you over longer time periods, making your more expensive products and services more accessible.
40. Tweak Your Shipping Charges
Low-cost or free shipping is an excellent sales incentive. You can build shipping costs into the overall price of your products to offer free shipping or offer discounts for local product deliveries.
41. Create Subscriptions
Allowing your customers to subscribe to your products and services can help to secure a regular source of income for your business.
Consider offering them discounts for subscriptions to regular refills or replacements, as you can automate these sales and save both yourself and your customers’ money this way.
42. Offer Coupons
Discount coupons create loyal customers and repeat purchases by allowing your buyers to try new products that they will pay full price for later down the line.
43. Personalize Your Marketing
Special incentives like discounts for birthdays, holidays, Small Business Saturdays, and anniversaries can help to persuade your customers to continue to support your business. These offers also add a personal touch to the customer experience, which helps to build loyalty over time.
44. Perform Customer Surveys
The better you know your customers, the better you’ll be equipped to meet their needs and your business’s profit projections.
Ask your customers to fill out brief surveys via email or social media channels describing their experiences with your business. This will allow you to define your key target audience and optimize your marketing strategies.
45. Modernize Your Sales Channels
Having an online presence is crucial for small businesses today. Keep your sales and marketing channels (and in-store displays) updated to ensure that you’re targeting the right audience while upholding an appealing and professional brand image.
46. Develop Your Brand Reputation
Enhance your business’s reputation with positive reviews, testimonials, and smart marketing strategies to position your brand as a trusted leader in its industry.
47. Invest Profits Back Into Your Business
Knowing how to calculate profit margins gives you the edge because when you see these margins rise, you can put some of this money back into your business. Invest in new tools, equipment, sales strategies, and employee pay raises to boost morale and keep your staff turnover low and productivity high.
48. Upsell Your Products
Upselling is similar to bundling, but instead of offering multiple products sold together, you encourage your existing customers to expand their orders by offering them more profitable products and services at their point of sale.
49. Experiment with Inbound Marketing
Inbound marketing attracts new customers by providing them with value-filled content and customized experiences.
It involves creating digital content, videos, social posts, blogs, infographics, downloadable guides, and other offerings that solve customers’ problems and help to build connections with them.
50. Try Guest-Posting
Many small businesses have their own on-site blogs, but guest posting can help to enhance your company’s reputation and recognition even further.
Approach respected publications in your industry and have them publish blogs under your name that establish you and your team as experts in your field.
Conclusion
Use these tips and methods to grow your small business and improve your bottom line.
Remember, increasing your profit margins doesn’t happen overnight. But with enough determination and the right advice at hand, you can generate more than enough income to successfully achieve your goals!
