Do you ever go a bit nuts trying to improve your profit? I get it. It can be challenging at times. In my last post, I mentioned four ways to increase your profits and regain your business’s sanity through proper accounting treatment, capitalization, a price increase, and outsourcing. Today, I have a few more words of wisdom regarding profit improvement.
Cut the Cord!
Cancel those stupid and wasteful expenses. You’ll find that, over the years, you’ve accumulated a great deal of wasteful spending. Things such as subscriptions that automatically get renewed and the expense is deducted from your bank account or credit cards regularly. These are most commonly for software applications you used once and then never again only to forget about them. Or perhaps it’s accessories for the photocopier you threw out several years ago. These kinds of things are just eating away unnecessarily at your profits.
Sometimes when we buy a new company, we just delete all standing orders and direct debits and just see who contacts us. As a famous movie once said, “We just fixed the glitch.” And that way, we can straighten it out later rather than trying to wade through mountains of bank statements to try to figure out what things are necessary, which can be very time-consuming. Get the vendors to do the leg work and then wipe the slate clean.
Analyze Cost of Acquisition for a Customer
Did you know that many businesses actually lose money when acquiring a customer? Then, they rely on keeping that customer for a long period of time to make that profit back, which isn’t necessarily the best approach. So often, if you simply reduce the company’s sales and marketing activity that has a high cost of acquisition, you can create a quick spike in the profit column.
While it might seem as if you’re taking a step back because you might have a drop in revenue, you have to look at the bigger picture. That’s because you have an increase in profit. And an increase in profit is a step in the right direction. So, losing turnover might feel like a step backward, but making more money is the ultimate goal. After all, if you’re valued on those multiple earnings, then you want to get those earnings as high as possible. So, cutting away the high cost of acquisition can give you that quick spike in profit and thus increased value.
Cross-selling Opportunities
Now, if you’re going to stop looking for new customers and you’re going to cut the cost of acquisition of new customers, it’s important to go digging in your own backyard to see if you can find some value there. If you do a quick analysis of how well you penetrate services into your customer base, what you’ll often find is that you have loads of room for improvement when it comes to selling more services to your existing customers. And obviously, your customers already have a relationship with you, and they understand you company’s strengths, making this all the easier to do.
I’ve always found that the easiest way to do this is to focus on a single vertical. So, pick one product or service that you don’t have much penetration for and pretty much dedicate the whole company to selling that additional service to your company base. For example, change your whole website to focus on just that one thing. Pay extra commission to every member of your staff for promoting that one item. Tell everyone about it using every means available (maybe even carrier pigeon!). Really focus on that one area of sales. Once you’ve exhausted all your resources, you could move on to another product or service that you’re going to focus on for a period of time and do the same.
Improving your profit takes some strategy and flexibility. But it’s as simple as these 7 key takeaways. Plus, they’re all things that you can do from within your company—own backyard so to speak.
And, if you want to learn more about improving your profitability, download my free special report. I also invite you to consider joining the Harbour Club and attending one of our virtual events where you’ll not only learn more about how to do all that I’ve discussed but also meet and work with other members who have successfully applied these strategies and techniques. I look forward to having you as part of our community.
Let’s Connect!
