When you show a profit on your business plan or cash flow forecast, it is only a projection. In reality, it is great if it reaches your aim, or even surpasses it. Often though, small businesses fall short of the profits they were hoping for because they are not always as productive as they should be.
1. Keep Track Of The Cents.
It does not take many cents to make a dollar, and looking after them can save you a fortune. Too many small businesses only look at the big savings they can make and they can be harder to find, which means it’s harder to grow the company, amongst other things. Several smaller savings can amount to just as much and be easier to implement.
When you are buying stock or supplies, make sure you get the best deal you can, even buying some things in bulk if you get them for an improved price. With larger items, such as machinery, equipment, and road vehicles, that is not so easily done.
What you have to remember is that you are the customer. Just as your business would not survive without customers nor would theirs. Be prepared to walk away if you feel they could be giving you a better price on a new computer or road vehicle, and you may be surprised how often their minds are changed.
Whatever you spend will have an impact on your profits; only buy something if you really need to and if you are certain you are getting the best deal.
2. Have Monthly Sales Goals.
You need to establish a break-even point for your business and should remember to include everything in it. Don’t forget the salaries you have to pay, utilities, inventory, supplies and anything else that your business has to spend. Then work out the percentage profit on each item sold and you will be able to establish how much your sales need to be to not be running at a loss.
Having a monthly goal to aim for can help to motivate you and your staff, and remember to always thank them when it has been achieved. These goals can also help you to focus on your marketing efforts to ensure that the sales do not fall short.
If your marketing produces new customers it can mean you need to prove their identity before you accept payments from them online. You can use Netverify to capture and verify customer documents, so you can be certain that your marketing efforts are only bringing you genuine customers. Small businesses cannot afford to be running at a loss for long, so this measure could be vitally important.
3. Look At Your Pricing Strategy.
You should not set prices on goods when you first start to sell them and never evaluate them again. The price from your supplier could have increased, or gone down if you are purchasing bigger quantities. You really need to keep a check on this or you could be selling some items with no profit without realizing.
Never undersell your products or service. If customers get a really good user experience, they would generally rather pay a little extra than buy the same thing cheaper from a company they feel does not care about them. There also seems to be a perception that if something is cheaper it must be of an inferior quality, which of course is not always the case.
You can always have a special offer if you need to move more of a particular product, but as a normal thing you should work out and keep an eye on your pricing strategy, even if that means you are a few cents dearer than your nearest rival.
4. Keep Your Employees Happy.
Happy employees are productive employees so it is vital they work in a good environment. Always be ready to listen to them. They may have a problem or an idea to help the business, but you should always let them know that no one is barred from talking to you. If the business is really busy, help them with the tasks they are working on.
Having a feeling of working as a team will encourage productivity much more than a ‘you and them’ attitude.
Reward them for a job well done. It does not have to be anything costly, but a token of appreciation goes a long way towards making them feel valuable and that they are contributing to the success of the business.
As a small business owner you will have to work hard to make it a success, but if you try to follow these few tips it might just be a little easier.
Photo by Anete Lusina