Business Strategy: Top 5 Ways To Improve Profitability

Looking for ways to increase your company's earnings? Here are tips to improve profitability.

In the business world, time is money. One of your primary goals as a professional or skilled worker is to increase profits without expending too much energy that can be put to better use elsewhere. As you plan ahead to the next quarter's profit and loss statement, here are some ideas that can help your company enhance earnings:

1. Expand your product line. Increase whatever it is that you are selling or providing to current customers. For example, if you market cute little six-inch bears for babies, add a second line of twelve-inch bears for older children. Or add themes, faces, or costuming that is different from what you already have. Customers who enjoy your products now often remain loyal and will continue to buy products, as well as recommend them to friends and relatives. In addition, those who have had no need for existing products may decide you now have something they can use. Survey customers with postage-paid index cards or one-sided questionnaires that can be completed in your shop. Then compile results to see what customers already like about your service, and what they are interested in for future purchases.

2. Update your client base. If you initially contacted 5,000 customers in the area when you opened your business five years ago, it may be time to add another 2,000 names from surrounding areas. Or you may decide to try another technique for racking up more customers, such as cold calling, direct mailing, or media advertising. If you want to grow, you will probably need more customers, so develop a plan to go after them. This may involve undercutting the competition by lowering your price at first or showcasing examples at local fairs or special events. The important thing is to broaden your exposure to reach more customers.

3. Overhaul your market plan. If you've been using the same print ad that runs in the local newspaper for five years, the positive side is that you have a niche and a logo. The down side is that people may tend to view you as old fashioned or less "cutting edge" than your competitors. It may be time to meet with a copy writer or graphic designer to update your image. In addition, consider trying a new approach. If you have 5,000 customers that were added by direct mail advertising, you might want to try a business to business letter to get other companies to buy and sell your products for you. Internet advertising is another great way to promote products and services, whether as a banner ad on another site or by building your own Web site for advertising and sales. Consult a Web guru for ideas and help.

4. Push the boundaries. If your customer base to date remains largely a local clientele, look into going regional into surrounding counties or towns. Word of mouth from existing clients may suggest that your products are starting to get a good name, so push further into an extended territory to see if a market might be cultivated. Of course you will need to study market patterns and competing enterprises, and you may want to call a few companies in the new area for an informal telephone inquiry. But be prepared to provide adequate service to a new round of customers who might result from expanding your business.

5. Build a name for yourself. Publish short newspaper articles. Offer interviews. Arrange in-store demonstrations or samples. Become visible to potential customers, since marketing strategies suggest that people like to buy a "person" rather than a "product." An attractive, neat, knowledgeable individual can sell a higher volume of business than an invisible face on the Web or voice in a letter.

Be bold, adventurous, and determined as you carefully plan the next phase of your business operations. Set a goal to increase profits by a specific margin, develop a plan to meet your goal, and watch good things happen!

© High Speed Ventures 2011