Trying to maintain a profit in your business is vitally important, not only for the ensuring the growth of your company but to ensure it continues to trade. New companies initially tend to struggle to make a decent profit as they build a customer base and spend money on marketing and new products.
Once you have been trading for a while, you will begin to think of ways that you can increase your profit margin to grow your company. Here are a few ways you can improve your profits.
What is Your Profit?
Before you can try to grow your profit margin, you need to understand what it is. Go through your accounts and speak to your accountant, you will be able to work out your turnover and profit generated. Compare your profits to other industry standards; you might think that your profits are low, but they might be the average.
It is always going to be a difficult decision to raise your prices, the best way to be sure is to check what your competitors are doing. Are they charging the same amounts for similar products? Sometimes, having your prices too low can have the opposite effect from what you want.
Once you know where your competitors are, it might make you feel more confident about raising your prices.
Compete in Other Ways
You don’t have to try and just compete on price with your competitors: try to offer something else that is unique instead. Offer a higher quality product and with greater service. These things can attract customers over price, so it is worth exploring.
Maybe you can branch out into other areas to try and gain more customers. Try areas that your competitors are not currently using to give you an edge.
How is your marketing strategy? Have you reviewed it recently? It could be that with a little tweaking, your sales could increase and therefore, your profits as well. Sometimes the smallest thing can make a big difference, so try to review your marketing strategy regularly.
You can also try to add new ways to market your company. Improve your small business marketing reach by adding some graphics using software products like Adobe Spark to your social media posts. Increase the times and frequency of your ads on Facebook or Twitter to retain interest.
Have you arranged the best rates with your suppliers? If you are buying only a few items, think about increasing the order to get a bigger discount. Perhaps you can get all of your supplies from one supplier instead of many; this might also get you a discount.
Some suppliers will give you better terms if you pay your invoices early, so speak to them and see if they have any incentives.
With a few changes, you can start to see an improvement in your profits. Don’t be tempted to cut corners on product or materials, however, because you may lose the customers you already have.