Building a business is no easy feat. There’s a lot of planning, strategizing, stress, and upfront costs to start a business. Lots of blood, sweat, and tears goes into the initial phase of startups. After putting in all that work, it’s only natural for a business owner to want to reap the benefits.
As any small business owner knows, you need to bring in money reliably to keep things running. But more than that, small business owners need to build sustainability alongside profitability. Your processes, physical products, digital products or services have probably changed along the way.
So instead of feeling overwhelmed by all the advice out there, or trying to do too many things at once, in this post we look at five concrete things you can do to make your business more profitable.
Create a business plan
No two businesses are alike. While they may be similar, each one will have their own business processes, unique offerings, customer experience, and company culture.
Along with that, the challenges that business owners face will be different as well. Some might have difficulty with customer acquisition or retention, others might have difficulty with employee engagement resulting in high employee turnover rates.
That’s all to say that having a plan in place will help, which is where a business plan comes in.
Drafting up a business plan can feel daunting, but with the help of an accountant it doesn’t have to be. They’ll help you develop a sound business model and hone in on your target market.
A business plan will also help you define your business structure, which is important if you need to hire employees and have a vision for how you want your business to operate.
On top of that, a business plan can help you attract external stakeholders and secure a business loan. Cha-ching!
Get a grasp on your finances
In order to keep your business running smoothly, you need to have a handle on your business finances.
That means keeping track of your expenses, like office supplies, equipment, graphic design and any other business costs.
Keep your business finances separate from your personal ones as well. You can do this by opening up a business account and credit card.
Not only will you want to keep track of your expenses, but you should also know where your business stands in terms of profitability. For this, you’ll want to look into your financial statements, which include the income statement, balance sheet, and cash flow statement.
An income statement is helpful because it will tell you whether you should be increasing revenues, decreasing expenses, or even doing both in order to gain more profit.
A balance sheet provides an overview of what a business owns (assets) and owes (liabilities), and what amount shareholders have invested.
Cash flow statements evaluate how well a business manages its cash position – to what extent they can pay its debt and fund operating expenses.
You also want to be mindful of ways you can protect your business during difficult times, like say a recession, market crash, or global pandemic. Some things to consider include diversifying your offerings (look for ways to take advantage of opportunities that may arise), minimising your debt, and cutting unnecessary expenses.
Set realistic goals
Successful businesses have all gone through their fair share of ups and downs. During the lows, one way to stay motivated and on track is by setting realistic goals.
First think about what’s holding you back. It could be fear, lack of energy, not enough focused time, or being spread too thin. Then, strategize. Tackle the fear, set aside more quiet time, and outsource tasks that drain your energy.
Set specific goals that are SMART — specific, measurable, actionable, relevant, and time-bound. Design your timeline by working backwards from what your business will look like when you’ve achieved the goal.
Think of goals that tie back to profits, like improving customer experience, offering physical products, or upping your marketing to give you a competitive advantage.
You can also categorize goals into short-term and long-term.
Reframe long-term goals in a realistic way by setting targets you know are achievable. Think of your short-term goals as building blocks for the bigger picture achieved through long-term goals.
Make these goals specific as well, such as increasing profits by 10% during the next three months or cutting expenses by 5% in the next few weeks.
Make sure to track your progress along the way and readjust as needed. If you’re stuck or unsure of your next move, reach out to a mentor or someone who has been in your situation before.
Customer retention
While being on the hunt for new customers is good practice, you should also nurture relationships with your existing customer base.
Successful businesses do this by adding value for their customers, whether it’s a styling service helping men dress their best in order to feel their best, or a home office product that fills a need for a customer that they just couldn’t find anywhere else. Look at ways your business provides value to your customers.
How exactly do you add value to your ideal customer? Do your research. Find out what your target market is, then narrow down your ideal customer’s lifestyle, their goals, identify their fears, what they need, and how they make their buying decisions.
You can also tailor your offerings based on customer feedback. Provide something so irresistible that they go from ideal to loyal customer in no time.
Whether you sell products or services, having exceptional customer service is non-negotiable.
If a product breaks and your customer wants a refund, make sure you answer them within an appropriate time frame. Go one step further to make sure they feel appreciated, by including a written thank you note for purchasing your product, or by meeting them in-person for lunch if they have questions about your service offerings.
Plus, if you have exceptional customer service, chances are your customers will refer business to you. A great way for others to see what your loyal customers have to say about your business is with online testimonials. This is a time-tested tactic for free marketing.
Market your way to the top
Staying in contact with existing and potential customers is also important so that you stay top of mind. Email marketing is a great way to stay in touch with your customer base and keep your customers coming back for more. A simple monthly email newsletter with current happenings at your business and specials will do the trick.
Make sure to direct your newsletter subscribers back to your website, so they can easily purchase from your business. Part of your marketing strategy should be to have a straightforward and easy-to-navigate site. You want your customers to be able to easily scroll through, and find what they’re looking for, whether it’s your offerings, Frequently Asked Questions (FAQs), or your social media channels so they can connect with you.
Nowadays, business success means having an online presence. At the end of the day, people do business with people, and having an online presence means that your customers can get to know you on a more personal level.
That being said, you don’t personally have to build your website — invest in a professionally designed site from a firm that understands your audience.
Don’t spread yourself too thin by being on all social media channels; rather, stick to channels that your customers visit the most.
Ultimately, having an online presence should be a part of your marketing plan because it allows you to engage with prospects, define your brand identity, and ultimately build a profitable business.
Take meaningful steps
Before you take drastic measures like selling your business or quitting altogether, take some steps towards building a more profitable business.
You can do this by creating a business plan, getting a grip on your business finances, setting achievable (yet challenging) goals, focusing on customer retention, and working on your marketing to attract new customers.
Build a more profitable and sustainable business with an accountant
Just as you would outsource your website design to a professional, seek guidance for your business finances to help you work towards a profitable and sustainable business.
You can start by requesting a consultation right here from one of our London Accountants. Understanding where you are and how you can get to a better spot with your business finances will set you up for years to come.