10 Tips to Increase Profits in Your Business
A general rule in your financial success in business is that you cannot increase profits directly, only indirectly. You cannot just say that you are going to increase profits of your business without some specific strategy.
The only thing that you can do to increase profits is to improve the variables that ultimately determine your level of profitability. When you improve these 10 variables about your business you will increase profits and affect your bottom line.
1) Lead generation
The process that you use to attract interested prospects to your business. If five out of ten prospects who come into your place of business end up buying from you and you can increase the number of people coming in from ten to 15, you can make more money and increase profits by 50 percent.
2) Lead conversion
The process by which you convert leads into paying customers. This is the measure of the effectiveness of your sales efforts. If you can increase your conversion rate from one out of ten to two out of ten, you can double your sales and increase profits.
Improving your ability to sell and convert interested prospects into paying customers is one of the most important things you can do. And there is no replacement for ongoing sales training, both for you and for every single person who speaks to customers, either live or on the phone.
Look at every key result area in your sales process and seek ways to improve a little bit in each area. A small improvement in each key area can lead to an enormous improvement in overall sales results.
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3) Number of transactions
The number of individual sales that you make to each customer that you acquire. By increasing the frequency of purchase by ten percent, you increase your sales and increase profits by the same percentage. What are some things that you could do to get your customers to buy more from you and to buy more frequently?
4) Size of transaction
The size of the sale and the profit that you earn from each. You should be continually looking for ways to up-sell each customer so that he or she buys more each time.
5) Profit margin per sale
Profit margin is the gross profit that you make from the sale of each product or service. By continually seeking ways to raise the price or to lower the cost of the product or service without decreasing the quality, you can increase profits per sale.
Every dollar you raise a price, if you hold costs constant, flows straight to the bottom line as profit. Every dollar you reduce expenses, if you hold sales and revenues constant, also goes straight to the bottom line as net profit.
6) Cost of customer acquisition
The amount that you have to pay to acquire each paying customer. You should be continually seeking creative ways to improve your advertising and promotion so that it costs you less to buy each customer. This can impact and increase profits of your business dramatically.
7) Increasing customer referrals
The customers who come to you as the result of referrals from your satisfied customers. Developing one or more proven referral systems for your business can have an inordinate impact on your sales and your business will make more money.
8) Eliminate costly services and activities
Many companies get into a routine or rhythm of offering expensive services to their customers that they could easily discontinue with no loss of customer satisfaction.
Look at the little services that you offer to your customers. Is there anything that you could reduce or discontinue altogether?
9) Reduce your break-even point
This is the number of items that you must sell each month to break-even or start making a profit.
You use this break-even point to evaluate the potential effectiveness of any advertising or any other expense that you incur to increase sales. Every expense to increase profits must be seen as an investment with an expected rate of return that is greater than the cost.
10) Raise your prices
In many situations, you can raise your prices by 5 or 10 percent without experiencing any market resistance. If your products and services are of good quality and your people are friendly and helpful, a small increase in your overall prices will not drive your customers away.
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When you practice continuous improvement in all of these areas in your business you will make more money, increase profit in your business and help contribute to your future financial success!
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