11 Ways to Increase Profitability in 2021
Whether you started your business as a challenge to create something new, to improve a something you had a negative experience with, or another reason – most businesses share a common goal: profitability.
Knowing how to improve the profitability of your business is essential for the sustainability of businesses. Many businesses with large customer bases have still failed due to financial struggles. This is typically due to lack of a strategic plan towards achieving profitability.
You don’t want to be one of those businesses that cannot earn a profit due to lack of planning. Below is a list of tactics you can implement into your business to head towards profitability.
- Redesign your process workflows for greater efficiency. Map out the steps you take for each process in your business operations and identify steps that can be cut or reworked.
- Set specific, achievable goals for team members. Every team member can be utilized to increase profitability. Refocus your goals for the year and guide your team how to contribute towards those goals.
- Decrease overhead by outsourcing some of your business processes. By hiring virtual teams through an external service provider, you can eliminate costs of office space, salaries and benefit costs – only paying for the hours you need.
- Hyper-focus your efforts. Spend the majority of your time, talents, and attentions on promoting your most profitable products and services.
- Implement and Monitor a budget. By utilizing accounting and bookkeeping teams – whether in house or virtual – you can have a staff dedicated to strictly following your designated budget to keep you in line on your monthly, quarterly, and annual goals.
- Use a cash-back business credit card. This is a simple way to get 1-2% reduction on your profit margin.
- Strategically plan ways to upgrade your top 15% of clients to a “gold” status with higher value offerings. They already trust your brand, they want your services, and will pay for those higher-tiered services.
- Look for opportunities to add-on services into bundles so you can increase the average ticket price of every sale.
- Attack your accounts receivable, starting with your most current. Utilize the help of a virtual assistant to contact customers and determine when they will be able to pay their invoices. By contacting your most recent due payments first, you keep the reminders at the top of their mind.
- Map out systems to help your customer consume your product or service more rapidly, increasing purchase frequency. Look for opportunities to educate them on the ideal use of your services or products.
- Get social, get qualified. Accreditations, licenses, and certifications can set you apart from your competition. Take your reputation online through social media, the website, and blog, as an opportunity to solidify your brand as an industry leader.