Much of business is about profits. Figuring out the best way to grow yours can be tough. Here are six tips to help you grow your company's profits.
1. Be Adaptable
Adaptability is an essential value to instill in any business, especially a startup which needs to be able to compete with larger pre-existing companies and find its perfect niche. There are several options to become an adaptable business, including working lean and agile, but all of them require a foundation of keeping up with trends in your market. Trends can change incredibly quickly, so if you keep your eye on how they're moving, you're more likely to be able to shift gears quickly. If you then implement lean and agile strategies, you're going to be more physically prepared to ensure your business pivots quickly and easily to keep up with those trends.
2. Reduce Risks
Even though risks are an inherent part of business, you'll want to reduce them as much as possible. Risks are part of every aspect of running a business, from the potential for equipment to malfunction to cyber attacks. You need to minimize risk as much as you can in order to preserve customer and investor confidence in your brand. One of the best ways to reduce risks is to invest in quality insurance for your business. Make sure the plan you choose covers your market and will be able to protect you in case of a cybersecurity breach. Additionally, make sure you get warranties on the equipment you utilize. Review your insurance policies to ensure they grow alongside your business needs.
3. Invest Well
Investing doesn't always mean making sure people are willing to buy shares in your organization. It can also mean investing in the time, support and training of yourself and your employees. Your profit margins will likely be very slim early in your business' existence, and you'll want to funnel that profit back into the company to begin making improvements and implementing programs for employees. If you've got a software company, for example, you could create training programs for customer service and IT employees so they know exactly how to use your software. Then, your customers and employees will have a much smoother, easier experience getting assistance from IT and customer service, which will grow your reputation in those areas and can lead to increased customer traffic. Similarly, most companies will do well to invest heavily in training their sales representatives, both in training workshops and on the job. This strategy will ensure you have a strong, confident sales team who are capable of consistently producing quality sales and retaining customers.
4. Be Attentive to Core Revenue Streams
Never neglect your existing customers, especially if you offer a continuous service or product. Core customers who are pleased with their product or service, customer or sales service and the company's customer-facing culture are much more likely to become repeat customers, so training your customer-facing employees to provide excellent customer service. You can also implement other strategies to assist in customer retention, such as loyalty, rewards and referral programs.
Customer retention and core revenue streams are vital to other aspects of profit growth too. If you're seeking funding you're more likely to be approved by a lender if you can prove you've got a wide market already in existence, which means the lender would be more likely to see a return on his or her investment in your organization.
5. Minimize Acquisition Costs
While growing existing revenue streams is important, it's a little difficult to achieve when you're a new business. Start-ups especially should focus heavily on customer acquisition. Customer acquisition is an essential way to grow your business even when you're more established, so it's one of the most critical business metrics to focus on when trying to grow your profits. First, you should calculate how much you spend per acquisition. The costs of acquiring customers include sales commissions, marketing and labor, and all of these tools do sometimes result in dead ends no matter what you do. However, you can implement strategies to mitigate dead ends. These could include scaling up teams or projects in marketing and sales that consistently generate sales and customer leads while scaling back those areas which consistently underperform. You can also invest in more training for sales reps to improve acquisition rates, which may cost more at the beginning but can prove to be a worthwhile investment in the long-term.
6. Think Ahead
Above all, think ahead. While predictive analytics will always have an element of chance involved, you should still leverage it for long-term future planning. Anticipate various potential scenarios and plan your next steps according to the most likely outcomes. Make sure you also make backup plans and are prepared to pivot if you're forced to make a change quickly. Know your organization's goals for the short-term and long-term, plan accordingly and use predictive analytics to see how your profits may grow depending on the strategies you implement. You should also periodically review past performance and profits to gain insight on how best to proceed with various projects, products and budgets.
Remember, to succeed as an organization, you must implement strategies and tools to grow your profits consistently and continuously.