The two biggest frustrations I hear from business owners is that they don’t have enough time or enough money to do all the things they’d like to do in their businesses. The easiest way to solve both of these problems is to make more money and use it to buy time by hiring people and outsourcing. Here are six easy ways to make more profit.
1. Increase Prices
There is no such thing as “the right price”. Price is a perception about value so the better your story, the more you connect emotionally with your customers, the more you can charge.
2. Reduce Costs
Check your fixed and variable costs and how you can make savings by negotiating better deals on supplies.
3. Focus on the Most Profitable Activities
Most business owners have their favourite activities but they’re not always the ones that make the most profit. Examine everything you do and give all activities a Green Amber or Red flag according to how profitable they are. Assuming your time is the most valuable asset in your business, spend more time on the most profitable activities and delegate or outsource the rest.
4. Control Cashflow
Check your cashflow chart first thing every morning. Knowing exactly what is due in and out is the best motivator to make sales calls or chase up overdue payments. Positive cashflow means you’re not paying interest or overdraft fees and gives you more flexibility to negotiate better deals.
5. Invoice Early
Negotiate up-front payments, deposits, staged payments and fast payments. Don’t wait until the end of the month, invoice often and frequently and don’t get caught by 90 day payment terms from big companies. Most will pay faster if you negotiate before you start the work.
6. Stop Feeding the Marketing Monster
It costs between seven and nine times more to get a new customer than to get more revenue from existing ones. 80% of the future income in a business comes from existing customers so spend more time making them happy and selling more to them than throwing money away chasing new ones.