As a small business owner, a Certified Public Accountant and a bookkeeper, I love numbers. I especially love when those numbers add up to more revenue and profits. But with summertime being the slow season for many companies, a lot of business owners are asking me how can they raise their profits.
I have managed to take my own company to a new level and make more money by implementing a number of strategies. Raising your profits takes some research and time, but follow these steps and you too can help your company bring in more revenue. Here’s how:
1. LEVELS OF PRICING – Some businesses offer different pricing to different companies. High volume clients often get a discount. But some companies also charge smaller companies less money for the same services as an incentive to stay on as a client. But now might be the time to review your pricing scale. If you have a lot of small clients, who you charge less to, or a lot of large companies that get discounts, you may want to reconsider these price cuts. Discounts can greatly reduce your company’s margins, so avoid this practice. Set a price for your services and stick to it.
2. DOUBLE CHECK YOUR BILLS – Make sure to check your bills. Most of us know exactly how much we’re charged by our suppliers, but sometimes I find mistakes in my client’s incoming bills in the overcharging of goods or incorrect billing. If you catch these errors before you pay them, your business profits won’t suffer.
3. RAISE YOUR PRICES – So now that you’ve done the research, it’s time to raise your prices. Business owners usually get a lump in their throat thinking about this, but with overhead always increasing, the only way to make more money is to increase prices. You may lose a small percentage of clients immediately after raising your prices, but gain thousands of dollars in extra revenue. Clients who value your worth will stick with you.
4. PROFITABILITY FORMULA – There is another way to raise your profits. It’s based on the profitability formula, which is directly related to turning leads into paying customers, then multiplying the amount of a lead’s transaction by the number of transactions that customer makes, and finally multiplying that by your profit margin. Sound confusing? Well consider this. If you have:
10 Leads x 20% Conversion Rate = 2 New Customers
2 Customers X $200 in Sales X 5 Sales = $2,000 Revenue
$2,000 X 25% Profit Margin = $500 Profit
Every company can plug their own numbers into this profitability formula and change the outcome of their own profits. In fact, you can make it your goal to increase your profitability by a certain percentage and in turn, increase your profits.
Increasing profits is a numbers game. As a lover of numbers, I love helping my clients win this game. If you watch your bills, know your worth, and aren’t afraid to raise your prices, you’ll be able to successfully raise your profits.
Good luck and feel free to email or call me if you have any other questions about boosting your revenue and profits.