It’s common knowledge that sales minus expenses equals profits. However, what not everyone can figure out is how to maximize profits while remaining a reputable and desirable business, whether it’s services or products you provide.
The most logical thing is to find a way to increase your sales while decreasing your expenses. Sounds simple in theory – it’s a little more complex in practice. While raising your prices might make you less competitive (though not always!), severe cuts in expenses can often result in loss of quality.
When you are hoping to raise your prices, you have to find a way to offer better or equal quality at the same or lower expense to your company. This where real strategy is necessary or else you can sabotage all the efforts you have made to date. Here’s some guidance for where it’s ok to cut the fat, and where it’s necessary to spend a little extra to make that impact on customers.
YES – Buy Large Orders
Though it can a financial risk in some cases, if you have regular staples that you use over and over again in your business, bundling your purchases can often save you money. When you buy in larger quantities, you can often negotiate a lower price and pay less for shipping, saving you money on every unit you use. If you can’t seem to justify buying so much of whatever it is you are ordering, consider splitting it with another local business that could use it as well! You’ll save money and make a friend!
NO- Spend Less on Marketing
When the going gets tough, do not skimp on marketing! There are ways around having a less than enormous marketing budget. All you need to do is get creative! Depending on your business, digital marketing might be the way for you, a method that is effective and data driven, so you know exactly what your money is doing for you. If you give up on marketing altogether, you are metaphorically cutting off your own legs during a marathon- you won’t get anywhere. How will people use your business if they don’t even know you exist?
YES- Buy Used Equipment
Though this doesn’t ring true for every type of machinery, a lot of industrial level equipment is long lasting. That and it’s very expensive. Try to find a large variety of used industrial equipment at a certified dealer and shop around for the tools you need, from mixers, pumps, mills, conveyors, and more. Your money will go a lot further and if it’s in good condition, it won’t affect the end result, meaning that your customers will still be paying for a high-quality service or product.
NO- Cheap out on Customer Service
In today’s market, customer service is truly key. In the day and age when online reviews can be easily posted and read by potentially hundreds of thousands of users, customer satisfaction should be one of your top priorities. That means that you should dedicate the right amount of funds that will make a good impression on customers – timely emails, friendly phone calls, quick resolutions, and just an overall great experience. Even if something was less than ideal when it comes to the service or product you provided for the customer, whether something quickly broke, came in the wrong colour, or didn’t perform as expected, a positive experience with a customer service representative cannot just turn this into an opportunity to gain a dedicated customer, but can also help create a great reputation!
Running a successful business isn’t easy, especially when you have the pressure of several livelihoods on your hands. However, finding a way to maximize your profits through being able to decrease your expenses while still offering the same great quality of service and/or products will lead to a more comfortable position for you and more confidence in your ability to lead your business. Having some extra padding in the account will allow you to be a little more innovative in your business, and more resilient to changes in the market.