Top 5 Ways to Increase Small Business Profitability
Small business owners put a lot on the line to make their businesses a success. With overhead, payroll, manufacturing and marketing costs, it’s no surprise that many small businesses struggle to make a profit. Regardless if they offer manufactured products or a service, there are numerous ways to increase profitability. Many of the best strategies are simple, yet the savings and increase in sales can quickly turn a small business from struggling to profitable.
Networking is vital to the success of a small business. It allows business owners to spread the word about their company’s services or products, while also meeting fellow small business owners. Through networking with other owners, individuals are often able to learn tips about running a successful business while also connecting with potential vendors or customers. The relationships developed through networking can lead to referrals, which may drive new customers to the business. While networking may seem like a lot of work, it can be as easy as attending local meetings or handing out business cards. Likewise, networking can be done through social media to further simplify the process. The results of simply introducing the face behind a small business can lead to shocking improvements in a business’s profits.
2. Upgrade Business Websites
One of the first steps that small business owners should take when starting a business in this day and age is to create a business website. A website is a smart business investment. However, many create websites and then fail to update them as the business grows. It is crucial to keep valid and up-to-date information listed so potential customers have access to questions that they may have without doing a lot of searching. Additionally, the website should look modern in design and provide a way for visitors to learn about and connect with the business. Adding an interactive aspect, such as a blog, is one of many effective ways to engage with both existing and prospective customers.
3. Reduce Marketing and Advertising Costs
Marketing and advertising is often a huge expense for small businesses. Depending on the method of marketing, the costs may not add up. Small businesses should focus on building strong social media pages, which are generally free to create. A business social media page allows the business to keep in contact with current customers while also giving them the ability to draw in new ones. Social media pages are especially effective when coupons or special offers are offered to those who connect with the page.
4. Go Green
“Going green” is a term that refers to using eco-friendly products and methods. Not only is it an excellent way to reduce a business’s carbon footprint, it is also an efficient way to reduce costs. Eco-friendly light bulbs in the office can cut down on the cost of monthly electricity bills, while going paperless can save on paper and ink costs. The cost of paper and ink may seem insignificant, but studies have shown that one typical worker in an office setting uses around 10,000 sheets of paper each year. If there are numerous employees, the total amount of money spent on paper each year can truly become an astonishing figure, and that is without factoring in the cost of ink. Customers are generally very supportive of eco-friendly businesses. However, traditional papers may be requested on occasion.
5. Offer Referral Incentives
Satisfied customers are much more likely to refer their friends, family or co-workers to a small business when a referral incentive is offered. Successful referral programs reward customers for spreading the word about a company. Generally, offering coupons or discounts to those who refer others is an effective way to encourage both referrals and repeat purchases. This way, companies are able to gain new customers and offer incentives to existing ones without increasing advertising costs.