Running a business is an interesting adventure and it is important that small businesses increase their profit margin if they are going to remain in business.
The world has changed so much in a minute due to the Corona Virus and we can hardly look back and remember in a clear picture, how things were before now or even how businesses functioned before the pandemic.
So many business practices have been either kicked out of the window or refined to meet new and exciting standards. Gradually, the way we see and do business has changed, and more so, for the better!
In this article, you would find out why it is important that small businesses to increase their profit and how they can increase their profit margin as we settle into the new “Post COVID Normal”
Why Is it Important That Small Businesses Increase Their Profits?
This is obviously so simple and straight to the point, isn’t it?
Every business opens to make a little “stash” by the corner and when that doesn’t happen, they pack up!
One of the biggest questions in the mind of entrepreneurs and business leaders is “how do I increase profitability?” you can hardly figure out how if you do not figure out first your “why”.
Knowing WHY you should make a profit is like a spark that lights the campfire.
Since businesses are open for a variety of reasons, it becomes increasingly difficult to create a template-like definition for business profitability but looking at it from the monetary aspect, businesses make a profit to stay afloat.
If to “stay afloat” is the only reason a business desires increased profitability, then they would not be fully profitable because anything to keep them above the water turns out just fine.
As a business leader, you should figure out your WHY! Figuring out why you REALLY desire to increase profitability, especially Post Covid-19, sets you on a different level gives you a mindset to pursue even more profitability and never stop.
Below is a list of 5 critically important ways small businesses can increase their profit this period.
5 Critically Important Ways Small Businesses Can Increase Their Profit
Identify and Maximize New Profit Centers
“A Profit Center is a branch or division of a company that directly or indirectly adds or is expected to add to the bottom-line profitability of the entire organization”Peter Drucker
Before I quit my job as a business manager (which is by far my best business decision yet), I realized that if we didn’t start making more profits, we would be having a lot of expenses on our hands that the monthly budget would not cover and so, I cracked my head open for a few ideas.
I knew what was working, I knew what was really moving the needle in the business and so, making it generate more income was easy but I am not one to settle. This drive to never settle made me look out for other things that were not really yielding so I can make them yield or even yield more.
This is what you should do in your business too. Discover what generates more money currently. That is your biggest profit center. Discover something else that can yield some little more money to support and when you get the ball rolling, you just created a new source of income/ profit.
Seek Out Premium Clients
One client can pay $5 for candy, another can pay $20 for the same bar of candy. The thing is; you can sell the same product to another client who would pay better!
Make a conscious effort to search out or reach out to premium clients who can shell out some good money for a great service and take your wares to them.
What you end up doing is that you have sold the same product or service to a different market and have made more profit. When you clearly understand why you are making a profit, you set yourself up for even more profit.
Raise Marketing Standard
The craze for digital marketing just took another turn! Do you not utilize digital marketing? Now is the time. No matter how much you pour into your product packaging, it would not sell as much as it would when you push it to more people via Digital Marketing.
Digital marketing allows you to market to a larger number of people. This is not restricted to Facebook advertising, it spreads to a whole lot of areas. If you do not reaccess your marketing strategies to weed out what does not for what works to grow,
This is the big deal! This is why so many businesses go under. Why run a business with so many areas that don’t generate money for you eating up all the money you make?
As you run and grow in business, you would learn that so many things you spend money on are unnecessary. All the unused subscriptions, the vacation allowances, the unused vouchers, all of them! To remain profitable, you must consciously, and continually take a look at your business costs.
Handling this aspect of your business gives you more room and peace
Make Employees Happy
Nothing beats a happy staff! When your staff is happy, it feels like the universe is working for you. Compromising on your staff’s happiness is setting yourself up for conspiracy without knowing.
Make working with you so exciting that when they look at their salary slip, they smile with satisfaction; this makes them wake up the next day and want to show up strong.
You know by now that the biggest cause of staff rebellion is when they feel disconnected from your business and so, it is important to keep them in the game for as long as possible.
Let me know what you feel in the comment section.