5 Tips To Increase The Profitability Of Your Business
Running your own salon can feel like trying to change a tyre on a moving car at times. When you’re swept up in the chaos of the average working week, working out a path to reliable long-term growth and profitability can seem like a horrifyingly big ask.
It’s a mountain that can very much be scaled, however! Regardless of what business you’re in, there are five consistently effective levers you can pull to increase the amount of money flowing into your coffers and lock in long-term profitability.
- Get more leads in the door
Assuming you’re not paying a crazy amount to acquire them, more leads nearly always means more money. That can be a big assumption to make, though. Particularly in the context of small businesses, many firms have a worryingly vague idea of how much it actually costs them to attract the attention of a lead in the first place.
Start by making sure you’ve got a documented procedure (however imperfect) for attracting leads, and a clear view of both your outlay and the amount of new prospects you’re attracting monthly. Even taking this seemingly earth-shatteringly obvious step will put you out ahead of the surprisingly large amount of small businesses who don’t track these numbers.
With that in place, focus on rigorously qualifying them and getting more of the right types through the door. Once you start digging into details here, you may well realise you’ve been spending a lot of time and energy attracting the wrong type of prospects to date. A little discipline here in terms of defining and focusing on your perfect potential clients is guaranteed to boost profits down the line.
- Optimise your conversion rate
Leads are the lifeblood of most businesses, but one point has to be crystal clear from the outset – they mean nothing until they’re converted. And the rate at which you convert them goes a long way towards determining your overall growth trajectory. Little hinges swing big doors here. A one or two percent improvement in your existing conversion rate could be the difference between a good year and a great one.
Start by making sure this a metric you’re actually tracking to begin with, then move on to relentlessly improving it over time. How you do this will naturally vary from business to business, but one general technique helps in every scenario – explicitly identify and document the series of steps that take place between that first contact with a customer and the eventual sale. Once you’ve got them defined, it’s simply a question of iteratively improving every part of the funnel and your conversion rate will naturally rise.
- Boost your average number of transactions per customer
Once you’ve actually acquired a customer, the next key area you can look at is how often they actually buy from you. Raise this number and you’ll naturally be looking at a healthier bottom line.
The paths towards achieving this goal are legion so your mileage will naturally vary. Start having a serious think about how you can either get your customers to buy more of what they’re already purchasing, or offer additional items they might be interested in.
Remember, the person who’s most likely to buy more from you is the person who’s already bought from you. Don’t be afraid to reach out to current and previous customers in order to identify where else they’d be prepared to do business with you. You can also look to lock in an increased number of transactions by offering package prices on goods or services.
- Raise the value of the average dollar sale
No matter what business you’re in, there’s always a segment of the market that’s prepared to pay top-dollar for a version of what you’re offering. They won’t just be interested in a premium offering, they’ll demand it.
Make sure you’re addressing this potential part of your customer base and you’ll see rising average dollar sale values naturally driving continued growth. Again, a brief customer survey of people you’re already doing business with can drive outsize returns here.
- Increase your profit margins
By the time you’ve had a good think about the first four points we’ve covered, you’ll almost certainly have identified a solid set of potential buttons you can push to quickly grow the bottom line.
As you go about implementing your newly identified tactics, take the extra time to clamp down on costs and expenses (while making sure to maintain overall quality). As long as standards aren’t slipping, a penny saved is very much a penny earned here.
Business growth is never easy but the paths you can pursue to achieve are actually refreshingly simple. Use our five proven options to cut through mental clutter and identify specific solutions that can drive growth in the context of your own business.
Tracey Daniel and Jane Challinor are the founders of the Real Business Group, an organisation which assist entrepreneurs and business owners to reach the next level in their business.
Comments are closed