Introduction
How to maximize profits is on the minds of most business owners. There are only two ways to do this: increase prices or reduce costs. You cannot simply say that you are going to increase the profit of your business without a specific strategy. All you can do to increase profits is to improve the variables that ultimately determine your profitability. Consider the following strategies to make more money for you and your business in 2021.
1. Improve your website
People are using your website to research your company before doing business with you. Can you improve their experience and build their trust so they can use your product or service? There are four things you should clearly do on your website:
- Explain who you are and what you sell
- Entice a potential customer to buy
- Make it easy to buy a product or service
- There is a way to easily contact sales or customer support with questions
2. Invest in your business
At first glance, you would hesitate to put more money into your business. Especially when you’re trying to figure out how to make more money, not less. Often, especially in times of turmoil where new opportunities arise, the best decision is a short-term price for long-term payments.
3. Increase your advertising
You will not hesitate to spend money on advertising. Maybe you’ve been burned by a marketer in the past who promised results and didn’t get results. Or you tried advertising yourself, such as Facebook ads, and you don’t think it works.
4. Raising prices
Both of these strategies are a thoughtful and unpleasant option in today’s economic environment. Still, sometimes, to stay in business, you need to raise prices. To determine the price, consider:
- How much does it cost you to make a product
- How much does it cost to deliver
- Costs for running a business – including administration and employee salaries
- Competitive price
- The last time you raised a price
After reviewing this data, determine a possible reasonable price increase. Include any pricing data in your business plan so that if you choose to review it later, you can.
Next, deliver this increase to customers. Explain why you came to this decision. If there’s any way to add value to a product without cutting a profit, do it and let customers know they’re getting more.
5. Follow the 80/20 rule
The 80/20 rule is to focus your most important efforts on your most valued customers. The idea is that 20% of your customers usually bring in 80% of your revenue; These are the people you want to focus on.
On the flip side, 20% of your customers frequently present 80% of your problems. Identify those problem-customers and fire them to free up your time on more positive business activities.
6. Cut costs
One way to think about reducing costs is to consider the profit leverage effect (PLE). P.L.E. The idea is that every dollar saved in the production of goods or delivery of services adds a dollar profit to your bottom line without selling too much.
Check your current processes to reduce costs:
- Are there areas where you can improve efficiency?
- Negotiate cheap products or services?
- Will adopting new software or renting a service save you money in the long run?
We will see more points in our next tutorial.
