When thinking of ways to have a more profitable business, a lot of people focus all or most of their efforts on boosting sales. More money will solve all your problems, right? (Spoiler: It won’t.)
In reality, bringing in more money is great for your business, but not if it’s just flying right out the window as soon as you get it. For higher profits, you should look for ways to reduce expenses and run your business efficiently, not just earn more. In other words, hang onto more of the money you already have.
Basically, the key to a more profitable business is two-fold:
- Make more money
- Keep less money from going out the proverbial window
Makes sense, right? But putting this theory into practice can be a challenge for any business, no matter how big or small.
Here are a few practical steps to a more profitable business that have surprisingly nothing to do with increasing sales.
5 ways to make your business more profitable
1. Make greater efficiency a priority
Operational inefficiencies are going to impact your business’s ability to turn a profit more than you might think. If you’re wasting time, you’re wasting money. The end.
Look for efficiency gaps in your processes and identify any time-consuming and/or frustrating tasks for you or your colleagues. What tasks are you performing manually that could be automated, instead?
Some suggestions for automated tasks:
- Recurring bill payments
- Monthly invoicing
- Follow-up reminders on late payments
A more efficient business means less wasteful spending and making better use of the resources you have available. In other words, you’re more likely to keep more of the money coming into your business, which is the whole point.
2. Invest in cloud accounting software
Speaking of greater efficiency, that’s basically what cloud accounting software is all about. The beauty of cloud accounting is the flexibility and convenience of having reliable, real-time financial data right at your fingertips.
Managing your finances in the cloud is a huge time-saver, which every business can benefit from. Because let’s be honest – we all have better things to do than manually update Excel spreadsheets each month.
When you embrace cloud accounting for your business, you can have a better handle on your finances on a day-to-day basis. This means you can also make more well-informed financial decisions. That’s a great way to ensure a more successful and *ahem* profitable future for your business.
Watch our one-minute video here to learn more about the many virtues of cloud accounting and how it can help your business to run more smoothly and efficiently.
3. Re-evaluate your pricing
Pricing is a tricky area for a lot of businesses, especially service-based businesses. You could be missing out on much-needed revenue simply because you’ve priced your services too low.
In the early days as a startup, you might be tempted to price your products or services below the market rate to try to stand out from the competition. Sure, you might get noticed at first but this isn’t likely to be sustainable as your business grows, along with your expenses. If you’re consistently struggling to make ends meet, the problem might have less to do with the number of sales but rather the amount you’re charging for each sale.
On the flip side, if you’re pricing your services too high, you could be scaring away your target market. Do your due diligence and market research to help you find that sweet spot in your pricing to attract your ideal customers.
4. Make it easier for people to pay you
In the age of electronic payments, there’s really no excuse for payments taking more than a few days to find their way into your business’s bank account.
In the old days (like, a decade ago) – with paper balances, snail-mail, and checks – weeks or even months could go by between order placement or services rendered and delivery of payment. That can be a real drag on your business’s cash flow, especially if you’re a service provider who collects payment upon completion.
Fortunately, it’s never been easier to get paid quickly. Thanks to cloud accounting tools like Bill.com, you can streamline digital payments for your business, which is a great way to ensure long-term profitability.
5. Outsource to save time and money
When any business is growing rapidly, it’s not uncommon for one person to fill multiple roles of responsibility. This is especially true for startups and small business owners.
But if someone is tasked with a responsibility that falls outside their wheelhouse, they can end up doing more harm than good by wasting valuable time and resources. Or worse, they might make a mistake that could put the business in financial or legal jeopardy.
By outsourcing important financial tasks, you and your staff can focus on what you’re good at while a qualified expert takes care of the stuff you’re maybe not so good at or don’t want to do in the first place.
It’s best to stick with what you do best – and let the experts take care of the dirty work.
Basically, just a few changes can do a lot
Having a more successful and profitable business has a lot to do with keeping more of your money and managing it wisely, not just bringing in more of it. Sometimes just a few small adjustments to your operations, such as outsourcing and making smart use of technology, can give your bottom line the boost it needs.
What are some ways your business has cut down on expenses and boosted profits without increasing sales? We’d love to hear.