1. Improve the purchasing process
After you’ve worked to make internal changes, it’s time to look at ways to improve the customer experience. This includes the way in which they interact with your brand and ultimately, purchase your products or services. It is worthwhile to map out systems that support consumers’ ability to spend money in a faster, more efficient way when visiting your brick and mortar (or online) store.
2. Increase your price point
When first launched, companies tend to price their products and services too low as a way to attract customers. As time passes, small increases may happen, but rarely is a complete re-evaluation of the pricing model ever completed. If you are over the one-year mark, take the time to research your competitors and pricing trends in your industry. You may be surprised at what’s considered “reasonable” to charge for your goods. The last thing you want to do is sell yourself short.
3. Reimagine more efficient workflows
Efficiency is everything. Examine and evaluate your existing workflows and systems in place. Are they as efficient as they could be? You should also consider the option of outsourcing, which can often be a mutually beneficial arrangement. First things first. Go over all the elements, such as reducing steps in the process or reworking of physical spaces to make them more systematic.
Source: Fortunly, 2021
4. Identify inventory levels
If a surplus of inventory is draining your profit margin, it’s time to identify levels that make more sense for your business. Learn from your mistakes! Knowing your bestsellers from your duds, seasonality, and individual cost margins are key elements. That’s why it’s important to keep detailed records of all products purchased and sold to have a better idea of the proper amount of each SKU you should be ordering. Once established, stick with it!
5. Do some number crunching
Profit margin is directly related to overhead and production costs. You can lower your overhead costs by examining existing expenses that no longer offer value. You want dollars invested in your business to support your company’s long-term goals and vision. As for money spent on production, it can be more cost-effective to manufacture overseas. If you are an advocate for US made goods, we find that admirable and suggest you do your homework to ensure you’re getting the best deal possible.
6. Avoid getting sidetracked
Side projects and shiny new opportunities can be tempting but make sure your Research and Development (R&D) endeavors sync up with your overall strategic plan. Profit margins are often lost to pet projects that fail to support your vision for long-term growth.
7. Focus on loyal customers
Map out a strategy that offers upgrades in service to your top 10 to 20 percent of clients. Red carpet treatment provides greater value for your customers and a promise of return business and referrals. We’ve all heard the saying quality over quantity and when it comes to making the most of every dollar, putting it towards the people who are more likely to continue to spend is a smart move.
These tactics all have a similar objective: sell more, spend less. As you focus on achieving consistent growth, apply these goals to your day-to-day operations and consider how they impact your bottom line. With the needs of small business at the forefront, tBp looks to build micro-office and retail spaces that meet the needs of entrepreneurs everywhere by keeping your profit margin in mind.