13 things you can do to make your new business more profitable
I thought this was a great article by Robert Craven. If you are looking to sell, or have just purchased and want to step on the gas and get things moving, it includes some great tips for business owners on how to make your business more profitable.
When you buy a business there are always things that can be done better.
If the previous owners did things perfectly then they would have been making huge amounts of profit and wouldn’t have sold the business to you.
In this article we will show you how you can quickly improve the balance sheet and make the business much more profitable.
Take two hours with your best business partner, mentor or advisor and work out how you can adapt your business plan and implement the majority of the following:-
1. Put up prices by 3% or more.
This creates more profit (per sale). Now if you sell exactly the same number of products as before, both your turnover and your profits have increased.
2. Decrease direct costs by 3% or more.
Go to all your suppliers and ask them for a better price… ask “Is that the best you can do?” and say nothing till they come up with a better price. Now you are making even more profit per sale.
3. Sack underperforming suppliers, customers and staff as appropriate.
This gets rid of the suppliers, customers and employees who make the working day more stressful. This will create a better working environment for your team and remove any customers who are losing you money.
4. Rethink the way you present the business.
Start talking to your customers about what they get as a result of buying from you – what’s left after the purchase. Focus on the benefits that they gain from using your product or service. This will improve your sales performance.
5. Sort out your proposition or offer.
What makes you different from the rest? Why should people buy from you rather than the competition? Be able to articulate the ‘why’ and ‘what’ of your business in a way that is truly effective. You should be able to do it in ten words or less.
6. Get more leads, say, 10%.
7. Get better at talking to people, asking for the business and closing the sale.
Going on a decent sales course (and sending your team on one as well) will add 10% to each of the fundamental steps in the sales funnel. Improving by 10% in each of these areas will create 46% more customers.
8. Get customers to buy at least 3% more products.
Once they have bought what they usually buy, suggest they purchase an additional product or service.
You can do this by upselling in store, or with suggested bag additions through ecommerce, or as part of your email strategy.
9. Get customers to buy at least 3% more often.
Encourage your customers to come back more often, start sending out a newsletter or social media campaign to get them to visit more often.
Check out tools like typeform or survey monkey for surveys, Google AdWords can be an incredible tool to target sales at specific customers through re-targeting too.
10. Stop them leaving
Run a customer survey right now – simply talking to existing and past customers will generate more business, I assure you. Most defectors are content but someone else came along who wanted their business more than you did …
11. Collect money quicker, 10 days quicker.
This will mean your bank balance will look healthier – your bank manager will like this and will be more willing to give you loans or overdrafts in the future.
12. Write cheques slower, 10 days slower.
This will again mean your bank balance will look even healthier!
13. Decide on three things you can do right now, and which cost nothing, that you could do to get existing customers talking about you.
Don’t procrastinate please. The faster you make the tough decisions and get on with it – the sooner you will see the positive results. Take massive action.
These changes will make a big difference to your balance sheet. Implementing these changes in a business that has a turnover of £100,000 and makes £30,000 profit per annum, If you run this model using pessimistic estimates it results in a turnover of £117,000 and the profits of £43,000! That’s a 40% increase in profits - the reality could be much more!
In reality, there may actually be a deeper, more subtle set of changes required of you.
It is one thing to recognise what needs to be done and it is great if you make the commitment to implementing the changes.
The problem is that as well as making the business decisions you also need to act upon them.
Create simple, easy to understand plans and communicate them with clarity and passion. Then take the massive action required to make the difference needed.
This is not about small, nervous, tentative steps but it is about boldness and passion – a great combination!
Stop reading, there’s work to be done. Now.
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If you are thinking about selling your business and need help with developing and documenting your sales processes and procedures visit us at www.businessexit.co.nz
You can arrange a time to have a free, no-obligation chat about your situation with one or our team.
To your business sale success.