As business owners, it’s easy to look to increase the number of sales (revenue) that you make, as a way for your business to continue to grow. But sometimes, improving profitability can occur with the number of clients you have remaining the same.
Here are some options of how increasing revenue isn’t the only way to increase profitability in your business.
Increase repeat business
You may have heard it said before that retaining an existing client costs less than acquiring a new one. But often so many of us focus our attention on getting more leads in the door, that we don’t take the time to consider the opportunity right in front of us.
Since your existing clients already have a relationship with your business and you have gained their trust, they are more likely to repurchase. You still need to market to them and maintain the relationship, but it will be more cost effective than what is required to gain new clients.
Review your pricing structure
A strategic overview of your pricing should be done on a regular basis to ensure you are properly capturing the value you deliver while factoring in your operating costs.
Continue to leverage your existing clients by turning your attention to how you can increase revenue per client. Some clients may not be aware of all the services/products that you offer or new services/products you may have launched.
If there is something in your product or service mix that solves a client’s problem for them, they’ll be grateful you let them know.
Improve business processes
Greater efficiencies in your business can be found by reviewing and improving your business processes. It’s a good idea to involve your team in the process as they will often have insights on the day-to-day time-consuming tasks that you might be further removed from.
Creating efficiencies can lead to less cash and materials wastage and a reduction in hours delivering your product or service.
Look to reduce the overall direct costs in your business as these have the most impact on your gross margin. When was the last time you negotiated and reviewed your supplier pricing? Can you find ways to reduce the number of “non-essentials” purchased in your business?
Take the time to look at decreasing your indirect costs. Can you improve training to staff to reduce errors? Are there low-cost marketing options you can explore?
Benchmark key financials
Benchmarking your business is a great way to measure your performance against similar sized businesses in your industry. Compare your costs for the likes of rent and utilities and highlight any areas where there is room for improvement.
Benchmarking also gives you the chance to assess the productivity of your business and highlights any opportunities to make your business more competitive and prepared for growth.
If you’d like to know more about how our team of business experts work with you to identify ways to improve your profitability, get in touch with us for a chat.