You've got your business up and running. Now is when you need to think about how you can increase your profitability. Turning a profit is after all how you're going to stay in business over the long term. And becoming more profitable doesn't have to be about making major changes—even smaller adjustments can have an impact on how much money the business is making.
Have a Mix of Items
Selling or emphasizing one product and/or service could be what is holding you back. Take a good hard look at that product. How much are you making on it? If let's say, it is selling for 5.99 but it costs 4.50 to make, then your profit margin on this particular item isn't as attractive as it might be for products that cost a lot less to produce. And, if you are successful at integrating another less expensive product, then it serves you well to try and pique your customers' interest in this alternative item.
Revisit Business Costs
As you grow, you have to keep an eye on those expenses. Keeping your business lean means keeping it profitable. Somethings you might do to this end:
- Start practically and take stock of every single expense. Know what is leaving and why. You may discover extraneous costs that can afford to be cut out.
- Look at your processes. As your business expands you're likely adding responsibilities—is this being done so efficiently? And potentially is there a way to automate some of these tasks?
Time for a Price Increase
If you are not as profitable as you think you should be, the issue could be one of pricing. Year after year the cost of operating a business does go up, and so it is acceptable that your prices reflect this. Certainly, you don't want to price yourself out of being competitive, but you do have to keep up with inflation to turn a profit.
It could be also that you're just experiencing a slower sales season and so profits are not where you need them to be. In that case, First Union Lending may have a solution for you. Our business lending products are designed to help small businesses in a variety of situations. Call today!