Seven Ways to Reinvent your Business for Bigger Profits
Daniel Kehrer shares 7 tips for improving profits in the new year.
By Daniel Kehrer
For small business owners, there’s a “new normal” out there, and it doesn’t look a whole lot like the old normal. If your business seems to be on a treadmill of too much debt, too many operating expenses and too little growth, it may be time to take “lean and mean” to a new level.
Everything you do should be subject to scrutiny and revision, including your mission statement, business and marketing plans, budget, sales and expense expectations and more, says business makeover specialist Patricia Sigmon, president of LPS Consulting (www.lpsconsulting.com), which creates profit-focused tech solutions for small businesses.
“If you've held on to that large office waiting for things to pick up, kept an extra car, maintained a larger-than-needed staff, have too many cell phones, or whatever, it's time to start a ‘new business,’ scrap what you can, and feel the relief,” says Sigmon, author of Six Steps to Creating Profit: A Guide for Small and Mid-sized Service-Based Businesses (Wiley).
Make 2012 about major regrouping, major renovation and creating a brighter, less stressful view of the road ahead – your new normal. Here are seven of Sigmon’s suggestions for giving your business a profit makeover:
1. Reward your best customers.
Look at which customers are giving you the most profit, and coddle them, woo them, don't lose them! Offer them frequent buyer rewards. Send them a small gift at their one-year anniversary. Give them a random call every few months to "check in," thank them, and ask what else they might need. Treat them like gold.
2. “Fire” unprofitable customers.
Sometimes, the highest-maintenance, most time-consuming customers you have are the ones who pay you the least. Analyze the profit margin or lack of profit margin that each customer or perhaps customer segment produces. Stop pursuing customers who are not helping you be profitable – period.
3. Start relationships.
This coming year, it's time to overhaul your sales behavior. Turn all one-time sales efforts into relationship sales. Start monthly maintenance plans, suggest auxiliary services, sell complementary products, or offer retainer plans covering 50-100 labor hours, for example.
4. Erase those expense lines.
Reduce your operating expense budget to the lowest possible number. If that means selling your car or closing an office, so be it. You can't build a new profit base when you are still using yesterday's expense model. Go through your expenses line by line and get rid of everything you can live without.
5. Outsource, outsource, outsource.
Whatever type of skill or service you need, think hard before hiring a new employee or keeping an old employee. Look at each department or each person when you are trying to manage costs. Can you eliminate positions (perhaps through attrition), combine jobs, delete processes, and outsource tasks? Outsource exactly what you need for the right amount of time and the right amount of money.
6. Update your networking.
From blogs to Twitter to LinkedIn to Facebook, invest in the online and social media presence you need to compete now. Businesses that don't leverage social networking will be left behind. Jumpstart new relationships with forum building. Update all your sites. Keep your online relationships fresh and dynamic with news, blogs, newsletters, tips, and surveys. Find an online forum in your industry and become an active contributor.
7. Take your office with you.
With cloud technology, you are no longer bound to a desk. Log onto some new interactive cloud-based systems that can help you do your business anywhere. Make sure you have Internet connections on all of your devices. Everything you once needed to do in your own office can now be done remotely. Best of all, when your employees are sharing files in the cloud, it makes for a much more cohesive, connected team.
Want to try this in your business? Connect with a SCORE mentor online or in your community today!