Small businesses face a competitive environment and have to deal with constant disruption. To be successful, small business owners need to develop processes that will help them grow their profits over time.
According to SEMRush, 66% of small businesses say they face financial challenges, and 43% say paying expenses on time is the most challenging. Given such statistics, it is clear that small businesses need to think about ways in which to increase their profits.
Here are 4 ways small businesses can increase their ROI and make sure their time is being used wisely.
CHECK YOUR PRICE STRATEGY
Pricing is a sensitive issue and there is no one right way to go. Any price increases contribute to profit, but could result in lower sales volumes. You also run the risk of annoying your customers, which can lead to lower revenue later on.
Start by examining the value drivers that your customers are sticking to. A great way to do this is to ask them directly what they think is an expensive, cheap, and borderline expensive rate. If you place yourself just below the third category, calculate the maximum possible price while your customers feel they have won something valuable.
Ask your customers clear questions and don’t leave them too many options. For example, if you ask them to rate their feelings on a scale of 1 to 10, you’ll end up in a mess as people rate the emotional impact behind these numbers differently.
Instead, narrow it down to 3 options and you will get more clarity. It’s also helpful to review your supplier contracts to see if you can squeeze any more margin out of them. You don’t want to destroy your supplier relationships, so always pursue a win-win strategy.
UNDERSTAND YOUR TIME
Time is of the essence for a small business. As the owner, you don’t have much time to attend to tasks and your resources are drained significantly. Managing your time is essential and that is why you need to install a time and attendance system.
Let your employees keep a record of what they spend most of their time doing and you will find out where time leaks occur. For example, you may find that unplanned visits and unexpected events present many challenges as they disrupt your regular workflow.
In situations like this, it is often best to use an online planning tool that will help you better convey your availability to your customers. With online scheduling and timely reminders of appointments, you can reduce cancellations, for example.
Needless to say, the extra time tracking you implement is going to point some of your employees in the wrong direction. You will likely think of it as micromanaging. You need to reassure them that micromanaging is the least of your goals and that the whole exercise is about making sure that your company’s time is being used wisely.
By accounting for your time, you can spend more time doing activities that increase your profit margins.
PRIORITY OF MARKETING
Thanks to intense competition, marketing is more important than ever today. More businesses are online than ever, and that means you need to be on social media and have a credible web presence.
Many small businesses neglect their website design and social media accounts because they believe that traffic will definitely stay high. This may be true at the moment, but there is no doubt that more consumers than ever are researching products online.
Neglect social media and you may be nailing your business in the coffin. Make sure you are consistently maintaining your brand image across your online channels and engaging with your customers. Consumers prefer dealing with companies that show a human face, so you need to come across as personable on your social media accounts.
Prioritize channels that bring the best results for you and always measure the most important metrics that drive sales.
INVEST IN PEOPLE
Your people are the best resource you have. So make sure they are satisfied and cater to their needs. Prioritize recruiting and try to attract the best possible candidates. It’s helpful to simplify office tasks like expense reports and payroll to ensure your employees are faced with the least amount of red tape.
Offering training programs and other financial support, such as B. Continuing education programs is a good idea if you can afford it. At the very least, make sure that you are doing your best to keep your workplace comfortable and meet your employees’ needs.
Provide your employees with clear career paths that will help them stay engaged in the workplace. After all, nobody wants to stagnate.
BETTER PROCESSES FOR MORE PROFITS
Every company is a collection of processes. The better they are, the greater your chance of making more money. Focus on these 4 tips and hopefully you will manage to grow your profits and protect your business during difficult times.
Disclaimer: MoneyMagpie is not a licensed financial advisor, and therefore the information contained herein, including opinions, comments, suggestions, or strategies, is for information, entertainment, or educational purposes only. This should not be viewed as financial advice. Anyone considering investing should do their own due diligence.