Today’s guest post strums a chord that’s near and dear to my heart – increasing business profitability. We’ve been on that same quest for the past few years and I was excited to dive into this post when it was sent over. In our experience, there are multiple ways to make your business more profitable over time, but they’re not always easy.
Which approaches are the most effective likely depends on your specific business and customers. But these general principles are great for a variety of businesses. My personal favorites are #’s 2 and 3. Let us know yours in the comments below.
How to Make Your Business More Profitable in 2019
What are you looking to achieve this year? If there’s one goal business owners almost universally agree upon, it’s the desire to make more money. With increased profitability, you can direct more time toward improving processes, building brand recognition, strengthening your customer relationships, and driving business growth.
At the root of it all, the one question always boils down to “How can I make more money?”. And we have some thoughts! Here’s our best advice on how to make your business more profitable in 2019.
Run your numbers more often
All businesses abide by the quarterly reporting system, but too many businesses fail to keep up with the numbers in between. In order to truly understand your cash flow, and to understand where there’s an opportunity to make more and spend less, you should look at your expenses by month.
Seeing the month-to-month cost of the electricity bill might just be the added push of mindfulness you need to turn a light off every time you walk out of a room. It sounds small, but little changes like that can lead to big results in terms of savings.
Prioritize customer service
If you want more profits, you need more business. That depends on you and your team delivering exceptional, 10/10 customer service on each and every interaction. A warm and bubbly staff is what will build lasting relationships with your customers-turned-friends. They’ll look forward to coming in, finding an excuse to stop by and say hello when they don’t necessarily need to buy anything, and write great online reviews that will spread like wildfire around town.
Hire the best from the beginning
Don’t settle on a lackluster employee who provides less-than-stellar customer services and shows up to work with an attitude. When you’re reviewing resumes and applications, remember that soft skills are just as important as hard skills. Don’t overlook the need to pre-screen employees before hiring; pre-employment screening is a must in order to cut down employee turnover costs, but if you’re not sure how background checks work, be sure to read up on local laws to stay compliant and prevent privacy violations.
How can you make your processes more efficient by cutting out wasted time and wasted money on excess materials? Lean Six Sigma is a method that relies on collaborative team effort to improve profitability by systematically removing waste and reducing variation. This lean business philosophy identifies eight different types of waste:
- Defects (broken parts, missed deadlines)
- Overproduction (extra copies of reports, “Reply All” emails)
- Waiting (for approvals, equipment)
- Non-utilized talent (employees not fully trained, skilled employees doing unskilled tasks)
- Transportation (hand-offs, multiple reviews)
- Inventory (stockpiling supplies, information piling up for data entry)
- Motion (walking between tasks, switching applications)
- Extra processing (excess detail, extra fields)
You can remember this acronym as DOWNTIME. Essentially, you should improve productivity and cut out anything that’s not essential to the customer and watch how big your profit margin grows.
Go digital wherever possible
No, you don’t need to have a team of robots—although if you could, it would save you a ton of money! But there is business management software that can easily handle the jobs of people who would otherwise require a salary. From project trackers to online human resource management, background checks to automated marketing, you might be surprised by how advanced these technologies are becoming.
Not only are these platforms significantly cheaper than the cost of a salaried or contract employee, but they’re also more convenient for both you and your staff. For example, rather than having to ask HR about time off, an employee could simply log into their account to make a request or check their accrued balance. Whether it’s digital payment services or pre-employment screening, the computer is almost faster and more accurate than its human counterparts.
If you have to let someone go in order to downsize your staff, be sure to give them as much advanced notice as possible. This will improve your chances of maintaining a good relationship with your former staff member who you don’t want to go around and bad mouth your business. Try not to feel guilty; you’re just as likely to be handed a surprise 2-weeks notice. It’s just business—and profitability is priority number one.