Are you making a profit or a loss? It’s a question business owners have running through their head all the time when they get their financial reports. Have we made money this month? Have we broken even? Or, have we suffered a loss? In an ideal world, your business will always make a profit. However, we don’t live in an ideal world! Many things can stop you from making a large profit, so you need to learn how you can prevent this and make more money.
What Is meant By Making a Profit?
First, we have to distinguish what we’re talking about by ‘making a profit’. Essentially, we’re looking at the amount of money your business makes when you factor in costs and revenue. It’s not the same as boosting sales or increasing revenue. You can have high sales figures but still, make a weak profit. These tips will help you out, and you can start applying them right away:
Raise Your Prices
If you own a business, then you know pricing is so difficult to get right. Your head is telling you to sell things as cheap as you can, to try and draw in as many customers as possible. The problem is, you might be selling things too cheap, which is will stop your making a profit considerably. It’s probably time to bite the bullet and raise your prices in line with industry standards. Often, just a tiny raise can be enough to dramatically increase your profits. Make sure you conduct the market research first to understand how high you can theoretically go. Also, the more people pay the more that value what your do and that can increase the number of sales and thus ensure you are making a profit.
Improve Your Bookkeeping
A little-known way to boost your profits is by improving your bookkeeping methods. If you’re trying to manage your books on your own, it’s likely you look for the fastest approach. You’ll run through everything without really paying attention to it and just looking at the final outcome of transactions. But, if you have some talented bookkeepers helping you out, they can analyse all your financial transactions. This lets them see where you can maybe save money and reduce your expenditure and in turn where you can be making a profit. What’s more, they could figure out what things can be deemed a tax-deductible business expense, meaning you pay less business tax. Better bookkeeping saves money, which increases your profit margin. Employing a bookkeeper will also free you up to do what you do best. In my case I’m a creative and strategist and I am an “ideas person” so bookkeeping is not a strength.
Work On Lead Conversion
Businesses seem to have a huge obsession with lead generation that greatly outweighs their work on lead conversion. Yes, generating leads is very important, but you need to have a good conversion rate. If 3/10 leads are going on to become customers, then you’re missing out on so much profit potential. Even if you increased that to 5/10, it’s still going to make a difference. It means more sales, without needing to extend your overhead costs. This is how you widen that profit margin.
Making a profit is all about two key things; spending less and making more. If you work on saving money and lowering your overheads as much as you can, it provides a better platform to work from. You can then try and convert more leads or raise your prices to generate more income. These things combined will help you boost profits in a very short space of time.