Reading Time: 24 minutesEvery
business wants to make a profit, and in order to withstand the test of
time, a healthy profit is a necessity. But what’s the best way to
increase your profit margins and boost your company’s bottom line? Is
the secret cutting back on expenses or raising prices? Maybe you should
cut back on inventory or renegotiate supplier fees, or perhaps your
company needs to amp-up its marketing plan.
The bottom line (pun
intended) is that there’s no single best way to increase profit margins.
That’s why if you ask 30 different experts for their best-kept secret
to increasing profit margins, you might get 30 different answers. To
find out what strategies and tactics today’s successful business owners
and experts are using to cultivate a healthier bottom line,
Direct Capital asked a panel of small business experts and thought leaders to answer the following question:
“What’s the single best way for small business owners to increase their profit margins?”
Whether
it’s finding the right balance between capacity and profits,
implementing an innovative pricing strategy, or expanding your target
markets, we’re sure you’ll find at least one tactic among the expert
responses below that you can implement when your company’s bottom line
needs a boost.
Here’s what our experts had to say:
Meet Our Panel of Small Business Experts:
Mick Hawes
Mick Hawes is CEO and co-founder of
UncoverHiddenProfits (UHP). UHP is designed to help small business owners find profits that are largely untapped in nearly every small business.
The #1 way for small business owners to increase their profit margins is:
Increase prices, but keep in mind the consequences.
Of
course, there are the standard garden variety ways to increase margins,
such as cost-cutting and increasing sales. But these often lead to
increasing stress and negativity within the team as they lose resources
and deal with increased pressure from new sales targets.
The
simplest way to increase profits is to increase prices. Seems simple,
but there are plenty of roadblocks, mostly emotional, to implementing
this simple strategy. The limiting factor to the price point for any
products or services from a small business is almost always in the mind
of the business owner. There is always a resistance to increase prices
because of the belief that everyone shops on price. Statistically, less
than 20 percent of people shop on price, meaning the majority of
consumers make buying decisions based on value.
In the absence of
value, meaning two identical products or services, everyone makes a
decision based on price. But when there is a perceived difference in
value between two products or services, more often than not the decision
is made based on the value. I’m not suggesting that you simply put up
prices. The key to this is re-releasing existing products and services
with added value and then offering them to the marketplace. As an
example, a restaurant wouldn’t simply put up prices. Instead, it would
introduce a new menu with added value and increased prices.
This
can be done in any business. It’s simply a matter of questioning and
listening to your customers to understand their frustrations, wants, and
desires. Gather this feedback and incorporate it into improvements and
refinements to your business’ products and services, along with, of
course, an updated pricing structure.
Then stand back and watch
what happens. In the majority of cases, profits simply improve. Very
rarely are there complaints or lost customers. And generally when a
customer is lost, they were a B- or C-class client anyway. Yes, there
are many ways to increase profitability in a small business, but most
are complex and often ineffective. Start with the basics: add value and
increase prices.
Glenn Cipolla
Glenn Cipolla is the VP of technology for
INTAP LLC, a
digital advertising space specifically focused on the luxury brand
gaming segment. One of Cipolla’s key responsibilities at INTAP LLC is to
maintain the company’s relationships with IT providers.
I think the best way for small business owners to increase their profit margins is…
Reduce IT cost.
For
example, my former company had an entire building of 100 IT engineers
tasked with maintaining its primary application. The total yearly cost
to maintain this team was into the millions. In contrast, my current
company outsources almost all of our IT. We leverage Cloud computing via
several cloud providers. This includes SaaS and IaaS offerings. The
result is that we have as much processing power as my former company,
more bandwidth, a higher level of redundancy, and the same 24 x 7
operational control and, get this: higher up-time. We have all of this
for a fraction (about 10%) of the cost that my former company spends on
its IT. Our profit margins are far lower as a result and other companies
simply cannot compete with us because of this.
Ryan Hulland
Ryan Hulland is Vice President and part owner of
MonMan,
a small business that specializes in small- to mid-sized business
marketing, growth, and market entry. Hulland has been quoted on websites
such as Tech Cocktail, Examiner, and Tech Pro, among others, usually
about technology and small business topics.
I think the best way for small business owners to increase their profit margins would be…
Think long term approaches.
Of
course the easy answer, according to economics and your friendly MBA
course, will tell you to cut expenses. It’s sound advice. Cutting
expenses will instantly increase profit margins. In the best case
scenario, this is but a short-term solution. But the next question you
have to answer is: Which expenses should be cut? My advice, for a
short-term boost in profit margins, is to cut tech spending. Maybe dial
back your businesses’ cell phone data plan limit. Check to see if you
really need to pay for five phone lines at your office. Can you switch
to VoIP instead of traditional land lines? Do you still have a fax
machine that is collecting dust? Are you spending $300 or more on new
cell phones for each employee? Cut that spending back! Are you buying
employees top-of-the-line laptops? How about a more value-priced option?
Do
you use any subscription-based apps like a CRM, ERP, or file-sharing
program? Cut back on the number of users or the storage limit, and
you’ll instantly save money. I make all of these suggestions because it
results in immediate savings while cutting out some bloat that most
businesses have. And if you do it right, the changes won’t even be
noticed. That extra 100GB of shared storage space won’t even be missed!
Now, I have to tell you. I am NOT a big fan of short-term approaches. In
my opinion, if you are looking for a quick fix to achieve
profitability, you are working for the wrong company! Sometimes, you
have to call it like you see it, and if the only way to “save” a company
is to gut a major chunk of it, that company may be too far gone to be
saved.
So, next, I would look at the long term. What is the best
way to get a company’s profit margin up in the long term? I’m thinking
no less than a year. Again, there is no magic bullet, and you have to
take it on a case-by-case basis. In general, you need to take a really
hard look at your company and the market, and you need to figure out a
way to become unique. To borrow a phrase from the ever-wise Seth Godin,
you need to find your own “purple cow”. Again, as with the short-term
fixes, if you can’t figure out a way to be different, be unique, and be a
market leader, you’re going to remain an average company and slow,
average companies fail in today’s economy. Harsh, but true. In today’s
market, you have to be the best, the fastest, and the most unique. It
might be the smallest of niches, but you have to be the best at
something. If you can think of a niche where your company could be the
best, and you could at least get part way there in a year, then you just
discovered your long-term profitability strategy.
Finally, as I
suggested earlier, I would not accept cutting employees or a mass layoff
as a solution. If the situation is that bad, and you are that desperate
to turn a profit that you have to fire the very people who make your
business what it is, you’ll be left with a business that is a shell of
its former self. I had a very wise and experienced manager tell me long
ago that the absolute last thing you should ever cut is the payroll.
Spend more on R&D, spend more on marketing, skip automatic raises
for a year, make the executives take a temporary pay cut, or implement
some other cost-cutting measure. But do not, under any circumstances,
cut your workforce! I know there are people who will argue with me, and
that’s fine. I’m sure there’re lots of big names with fancy MBA degrees
that will say that “a strategic right-sizing of the current workforce is
exactly what this firm needs to turn around.” To that, I say hogwash!
That’s no way to build a fast, agile, and unique market leader! That’s
the fastest way to become a dinosaur. We saw way too many of those
dinosaurs in 2007-2008, and smart business people learned their lesson.
Michael Bremmer
Michael Bremmer, CEO of
Telecomquotes.com, has specialized in telecom/tech for more than twenty years.
I think the best way for small business owners to immediately increase their profit margins is…
To regularly review your client list to determine several things:
1. Who is making you the most money right now?
2. Who has the most growth potential? Create a written plan for each of those clients and work it like a rented mule!
3.
Who isn’t making you money or doesn’t have growth potential? Typically,
these are your biggest time crushes, complainers, and late payers. Cut
them loose NOW, even if you have to lose money to do it. Your ulcer will
thank you.
Our company focuses all its efforts on our top 50, who
also happen to comprise 74 percent of our net profit and have the most
growth potential. It’s helped us to have two record years in a row,
while at the same time eliminating some horrid people from our lives.
Diana Santaguida
Diana Santaguida is co-founder and creative director of
SEOcial,
a metrics-driven search marketing agency serving as special forces to
marketing decision makers who want to get ahead digitally.
I think the best way for small business owners to increase their profit margins would be…
Realizing that margins are fluid.
Small
business owners often fail to realize that margins are fluid. Many
businesses focus heavily on increasing income and forget that expenses
are also fluid. Sometimes the most effective way to improve your profit
margins is to decrease your expenditures. This can be achieved through
improving process efficiency, leveraging emerging technologies, or
negotiating better rates when possible. I try to find one change each
month that can save my organization money. Don’t ignore the forgotten
metric that matters; decreasing expenditures can really pay off.
Harry Keller
Harry E. Keller, PhD is the President, Chief Science Officer, and Founder of
Smart Science Education Inc.
I think the best way for small business owners to increase their profit margins would be…
There
really is no single best way to increase profit margins because small
businesses are so diverse. One may reduce inventory, while another
doesn’t even save inventory. Some may find ways to reduce supplier
costs, but some others don’t have suppliers. Some can offshore aspects
of their business, e.g. support, manufacturing, or coding, but many
don’t have this option either. Think about restaurants. It’s too obvious
that you can increase profit margins by increasing prices or decreasing
costs, which divide into fixed and variable costs. The best way for one
business is not the best for another. Therefore, the only sane answer
to the question is a means that will work across the broad spectrum of
small businesses.
I’d love to advise reducing costs, but that’s
way too general, and, as hinted at above, no single cost-reduction
strategy is likely to work for every small business. That leaves raising
prices, but many businesses work in extremely competitive environments.
Your task, if you’re a small business owner like me, is to find ways to
redefine some or all of your products and services as premium and
charge accordingly. Why should your competitors be setting your prices
for you?
The increase in price might reduce your volume, resulting
in fixed costs being a greater percentage of your price and reducing
your margins. Avoiding this problem may mean a greater price increase
than you were considering and more money spent on rebranding your
premium products and services as being better in some way. In a
restaurant, it could mean completely changing the interior and cleaning
up the exterior, followed by a strong community outreach. In an SaaS
operation, it can mean becoming more responsive or having a wider range
of capabilities. Generally, these things require an upfront investment
that you then amortize and figure into your analysis. Don’t forget to
include any increased cost of customer acquisition as you decide on your
new pricing.
Just because this is the single best way to improve
profit margins for small businesses does not mean that you should ignore
your costs. Never stop looking at your expense reports and seeking ways
to reduce those numbers without harming your business.
Amad Ebrahimi
Amad Ebrahimi is the Founder/Writer at
Merchant Maverick.
I think the best way for small business owners to increase their profit margins is…
Renegotiate terms and rates with current vendors or referral partners.
If
you own a product-based business, then approach your vendors and ask
for wholesale discounts. If you’re a valuable source of revenue to them,
they’ll work with you.
In my own business, we refer a lot of
customers to other companies, so what we like to do is renegotiate our
referral fees based on how well we’re performing. Our partners obviously
appreciate our business and are happy to pay us more, especially since
we can reinvest that capital into increasing revenue for everyone. This
tactic obviously won’t work with some small businesses, particularly
service-based, but the guiding principle here is that sometimes it’s
best to get more out of what you already have.
Katie Everds
Katie
Everds grew up in San Diego, California, then moved to Los Angeles in
2007 where she attended UCLA. She received a Bachelor’s degree in
Psychology but always had the itch of entrepreneurship. Upon graduation,
she started her career in marketing while developing her first product,
the
Tillow, at age 24. Katie, Founder and CEO of Everds Investments LLC, strives to develop and market innovative products.
I think the best way for small business owners to increase their profit margins is…
Find that near-perfect manufacturing partnership.
It
is worth it to put in the time and ask the correct questions off the
bat. Your margins may seem great, but if the manufacturer cannot produce
large quantities in a timely manner, you may lose out on larger deals
because you are unable to deliver. Never opt for a lower-quality product
to cut costs, because your customers will know the difference and you
will lose more business than any money saved in the process.
My
advice is to take the time to find a trustworthy and efficient
manufacturer. Go out and source materials yourself. Get as many quotes
as possible to learn the average costs for materials and strive for the
lower end. Never compromise quality and always took for ways to enhance
your product with limited changes in materials. This way, you will
retain customer loyalty and quality control!
Jonathan Kendall
A global advisor, keynote speaker, and selling and
business coach,
Jonathan teaches organizations and individuals how to use and expand
their skills to best develop their organizations. His professional
experience in technology and business from the USA to Latin America came
from his synergetic love for all things technological, entrepreneurial,
and commercial. Always focused on success by building on each
individual’s potential, Jonathan’s career has enabled him to create
massive value and help others build and expand on their success.
I think the best way for small business owners to increase their profit margins is…
One word: sales!
The
biggest problem we see every day with small businesses that stay small
and marginally profitable is that they lack a solid sales pipeline.
Businesses are not facing the fact that there are clear generational
differences in successful sales by, and to, the three primary
generations as buyers, users, and managers. A well-trained sales team
that is sensitive on how best to reach and convince the buyers of the
value of their product or service will create an improved revenue stream
and enhance profits.
Millennials, Gen’X’ers, and Baby Boomers are
unique and, many times, at odds because they cannot understand or value
the uniqueness of the age group’s view of life, happiness, and values. A
well-run, profitable company understands this and delivers the
corporate message in a way that connects to everyone and makes the
profits roll in.
Julien Bouyssou
Julien is the co-founder and CEO of
BillXperts,
a web-based start-up specializing in saving people money on their
monthly bills (phone, internet, TV.). Bouyssou has about 10 years of
experience as a finance consultant, both in large organizations and
small-sized businesses.
I think the single best way for small business owners to increase their profit margins is…
Eliminate waste.
The
LEAN concept of identifying waste and eliminating it applies to both
large organizations and small start-ups. So as a small business owner,
make sure you scrutinize you expenses as if it were your own money and
look for opportunities to simplify and standardize your processes.
Brian Carter
Brian
Carter is a 15-year digital marketing veteran and popular social media
speaker (with clients like NBC, Microsoft, Dramamine, and PrideStaff)
who delivers practical takeaways, entertainment, and motivation. His
company,
Brian Carter Group,
is a boutique agency with world-class expertise using digital/social
marketing and advertising to boost profits for growth-minded businesses.
I think the single best way for small business owners to increase their profit margins is…
Either
1) lower your customer acquisition costs (we prefer to do this by making digital marketing, advertising and landing pages more efficient), or
2) increase your price. To
do the latter, you need to make sure you’re focused on what makes your
offering uniquely more valuable than other options. You can’t do this in
a commodity situation. And this is why having a Unique Selling
Proposition is so important. The obvious third way is lower your other
costs, but these are often fixed.
John Rampton
Best known as an Entrepreneur and Connector,
John Rampton
was recently named #3 in the Top 50 Online Influencers in the World by
Entrepreneur Magazine, in addition to being recognized as a blogging
expert by Forbes. Rampton has also been named among the Top 10 Most
Influential PPC Experts in the World for the past three years.
Currently, Rampton is the CEO of
Due.
I think the single best way for small business owners to increase their profit margins is…
Get more out of your current customers.
These
are people who have forked over their credit cards and trusted you. Now
it’s time to figure out what they are willing to pay more for. Next,
ask them to refer their friends. If they truly love your product, they
will refer everyone to your service. The profit margins will keep
getting bigger and bigger.
Dave Barnes
Dave Barnes is the founder and CEO of
Gym And Fitness,
one of Australia’s largest online retailer of fitness supplies and
equipment. Barnes was involved in many competitive sports throughout his
teens, so he was always in and out of gyms and had an interest in his
own fitness. At 18, he tried to set up his own home gym and noticed a
major gap in the online market for fitness equipment sales. Thus, Gym
and Fitness was born.
I think the single best way for small business owners to increase their profit margins is…
AdWords, without a doubt, is my number one, go-to tool to increase profits.
With
AdWords, we can extract actionable insights from all the data we’ve
collected. We’ve considered it a great tool for marketing automation
since it takes away all of the tiresome effort traditional marketing
required before it. Now, all you have to do is prepare your keywords,
decide on your budget, and let AdWords reach the searchers that matter
the most to your profitable business.
Snowe Saxman
Master
Business Consultant, Wealth Management Expert, and Coach, Snowe Saxman
helps women (and some men) break free from limiting beliefs surrounding
money so that you can realize your full potential in your business and
your life. What makes her unique is that her
signature programs also teach you how to manage and multiply money so that you can focus on what you do best!
I think the single best way for small business owners to increase their profit margins is…
Strategic tax planning.
The
IRS estimates that we over pay taxes by about $945,000,000. Most of
this is due to the fact that people file their taxes themselves. They
make mistakes and miss money-saving tax strategies they didn’t know
about. Most small business owners do not know the taxes they are liable
for, all the deductions they are allowed, or any money-saving tax
strategies. A lot of them are using traditional accountants and CPAs;
however, most of these professionals only offer record keeping services,
not strategic tax planning.
Daniel Brady
Daniel Brady owns
Heavenly Hammocks Australia,
an e-commerce business. He also owns more than 25 websites not focused
in the e-commerce space. Brady has experienced the failure of one
e-commerce business, but it was a valuable learning experience that
served to make his current business more successful.
I think the single best way for small business owners to increase their profit margins is…
1.
Up-selling related accessories with each product. More than 50 percent
of our customers add accessories, and every time they do, profit margin
jumps from 30 to 40 percent of revenue to more than 50 percent. It’s
because the accessories are free to deliver (they’re small and added to
the same package) and the advertising is already paid for. The only cost
is the accessory itself.
2. Using a courier price comparison tool
for each order to minimize delivery cost, such as ShipGooder.com or
PostageSupermarket.com. A previous business of mine failed due to high
delivery costs because we didn’t use this technique. This newer business
is doing far better because of it.
3. Cutting import costs by
negotiating and importing higher volumes. We cut our product costs by 35
percent by doing this, all of which went straight to profit. Cutting
other expenses where possible, like negotiating better payment
processing rates, helps too.
Eric Barton
Eric Barton is an author marketing strategist,
direct response copywriter, search engine/pay per click specialist and
serial entrepreneur who has been featured in places like Entrepreneur
Magazine, CBS Money Watch, ABC, and more. He helps small business owners
and entrepreneurs at
fasteasysuccessmarketing.
I think the single best way for small business owners to increase their profit margins is…
Knowing the math and adjusting the marketing system to make the math work.
With
thousands and thousands of niches and hungry customers out there,
setting up an automated online business (or even an offline
brick-and-mortar business marketing system with back-end offers in
place) is the best way to not only take advantage of new customers, but
also generate more profits from current customers.
Any business
owner or entrepreneur can set up a system or marketing funnel, generate
leads, and turn those leads into customers on autopilot-24 hours a day,
once they have the right system in place.
We all know business can
be a risk, and that’s why it goes back to modeling what works: testing
and scaling up backends. A lot of business owners are usually concerned
with generating new customers at the lowest cost per acquisition. But
when you have backends in place, you can even pay more than your
competition to obtain a lead or customer (which will be most likely be
of a higher quality) and still generate massive profits.
Mark Sullivan
Mark Sullivan is Director of Analytics for
CallRail.
He is passionate about arming small business owners and agencies with
the right tools to create exceptional sales success in an extremely
tough and often fragmented online environment.
I think the single best way for small business owners to increase their profit margins is…
Most
small business owners are struggling as it is to run their business,
let alone gauge the effectiveness of their marketing investment. While
being aware of investments is important, SMBs can easily be fooled by
all the new marketing metrics out there. When it comes to marketing
efforts, and ultimately increasing profit margin, the best thing for
small business owners to know is what counts as a solid lead and how
much they’re paying for that lead.
Lead Acquisition Cost, or LAC,
is a direct correlation between a business’ marketing efforts and the
results of those efforts. Regardless of where they’re advertising, SMBs
can still measure a direct return back to their investment. LAC can be
easily measured regardless of campaign, be it social media, search
marketing, or even a simple print ad.
LAC does not focus on a
“click” or a “like”, but an actual customer engaging with the business.
Similar to Cost Per Lead (CPL) or Price Per Lead (PPL), LAC is a
calculation and qualification of the amount paid for each lead, of any
form, that a business receives. Once SMBs gain perspective on their own
lead acquisition costs, they can start to eliminate unsuccessful
marketing efforts and increase their profit margins.
Aman Mann
Aman Mann is the co-founder and CEO of
Procurify. Behind the title is a man who strives to constantly improve, not just himself, but also those around him.
I think the single best way for small business owners to increase their profit margins is…
To remember that controlling costs is actually more efficient than increasing revenues.
The
Gartner Group estimates that a five percent reduction in operating
costs can have the same impact as a 30 percent increase in sales.
Optimizing operational processes like purchasing can be as simple as
implementing e-procurement solutions or other controls to manage how
company money is spent. Don’t just give your team credit cards, give
them budgets and make them accountable for tracking them and ensuring
the purchases are made from the correct suppliers. Maverick spend occurs
when staff buy an item needed for their work or for the office in an ad
hoc fashion, which typically results in the item being purchased at a
premium price rather than from preferred suppliers where deals may
already be negotiated. These additional costs can add up quickly.
There
is also an issue with the purchasing process itself in many
small businesses, where the simple task of requesting, approving, and
tracking budgets become a messy time-sink for the entire team. Papers
are lost, Excel sheets are difficult to collaborate on and email is not a
very effective filing cabinet. Not to mention, it is pretty much
impossible to run reports on all this scattered data.
Without the
ability to run reports on all of these dispersed actions, process
improvements continue to remain elusive. By streamlining and efficiently
tracking this process, the time savings can result in huge operational
cost savings and a less-stressed workforce. The team can also know ahead
of time when they are nearing the limits of their budget – instead of
after the fact.
Marc Scheipe
Marc Scheipe is the CFO at
Sage North America.
Scheipe is an accomplished business leader, with more than 20 years of
financial services experience focused on financial management, strategy
development, process improvement, and sales/operations leadership.
I think the single best way for small business owners to increase their profit margins is…
In
most businesses, the most obvious way to improve profit margin is to
increase revenue. Since most cost structures include a material amount
of fixed costs, increasing revenue will typically add variable costs up
to a point where additional capital costs may be needed. It’s very
important to understand the cost structure of your business and the
drivers of incremental (profitable) revenue.
Sean Mallon
Sean
Mallon started his first business, which has grown to be one of the
biggest traditional business brokers in the country, at the age of 21.
As well as buying and selling his own business, Mallon has handled over
1,000 business sales. He has recently launched
bizdaq,
an online platform which provides business owners with all the tools
required to sell their businesses without the costs or commitment
required by traditional selling agents.
I think the single best way for small business owners to increase their profit margins is…
Invest
in your people. Not only is it the right thing to do, but there is
plenty of hard evidence demonstrating that happy employees equate to
hefty profits.
Satisfied employees have higher motivation, which
leads to better customer service and satisfied customers. All of these
factors lead to increased reputation and brand awareness which, in turn,
will bring more business to your company, thus increasing your profit
margins.
Some small business owners may feel that it is too hard
to compete with benefit packages that most larger organizations can
afford to offer; however, this really isn’t the case. The trick to
ensuring your employees remain engaged and productive is by determining
what makes your company unique and pitching it hard.
Small
businesses have the advantage of delivering unique benefits which larger
businesses could not, so make sure you utilize these. For example,
handing out gift cards to local restaurants every once in while or
ensuring the kitchen is fully stocked with food and drink demonstrates
to employees that you value their work and want them to enjoy their
private time. Small businesses can also offer better work-life balance
and flexibility than many larger organizations, as the size of the
workforce makes this easier to manage.
Creating a collaborative
environment also makes employees feel valued, as well as customizing
roles and compensation packages to individuals. For example, offering
full health benefits straight away is a benefit which small businesses
can offer, whereas larger companies tend to make their employees wait 90
days. These are all motivating factors for employees, ultimately
increasing their loyalty towards the business.
Making your work
place fun is important for employee satisfaction and engagement. It has a
direct impact, as encouraging people to bring their personalities and
passions to work leads to a seamless work/life balance where people feel
that they can really be themselves at work. Fun and games are great
stress relievers, too.They keep the workforce refreshed and build real
bonds between employees.
Additionally, providing fair pay,
development opportunities, and having an approachable management style
will all illustrate to employees that you want them to be part of your
businesses success, as well as providing them with the opportunity to
lead a more balanced life.
Keeping your employees happy is the
most effective and sustainable way to ensure your profit margins
increase and continue to do so. It’s a continuous cycle, as providing
great customer service and creating more business imbues the company
with excitement which helps employee retention and motivation. Everyone
wants to be part of a winning team.
Jennifer Goldman
Jennifer Goldman is a Certified Financial Planner and founder of
My Virtual COO,
the leading operations efficiency and implementation expert in the
financial RIA community on technology, integrations, processes, and
outsourcers. Prior to founding MVCOO, Goldman spent over 20 years in the
financial services industry, starting in Quality Control over a large
bank mortgage lending division to then building her financial advisory
business.
I think the single best way for small business owners to increase their profit margins is…
For
service businesses, use your tech to automate and eliminate
administrative work, which reduces costs (admin costs, owner’s time
managing the admin, cost of desk, lights, computer, etc.). A specific
example is using an appointment scheduler to allow people to self-book
calls and appointments.
Jasmeet Sawhney
Jasmeet Sawhney is
a serial entrepreneur who has been in digital marketing and social
technologies for over 10 years. He has helped both startups and large
corporations in their branding, product marketing, and lead generation
efforts.
I think the single best way for small business owners to increase their profit margins is…
A 30-20 rate increase.
Every
year, we analyze revenue generated from each distinct solution area.
The objective is to identify offerings where we can increase our rates
by 20 percent without losing the customer. We then select accounts that
generate 30 percent of our total revenue across these identified
solution offerings. Sometimes, this means that one of our clients may
get the same service at a lower cost than the one we identify for rate
increase. We have not lost a single customer because of this strategy.
Blair Nastasi
Blair Nastasi is the CEO and Founder of
Media Moguls PR
and Co-Founder of Kickass Business Cruises. She’s been featured on ABC
News (three times), Bplans.com, Docurated, and CEO Blog Nation. She’s
also the #1 Marketing & Business Columnist on Examiner.com and on
the board of directors for three non-profits.
I think the single best way for small business owners to increase their profit margins is…
Immediately
begin outsourcing small, time-consuming tasks as well as any areas of
the business the business owner and existing team are not well versed in
(such as marketing, accounting, etc.).
Time is money, and if a
business owner is wasting time creating spreadsheets, fielding
unimportant calls, or scheduling social media posts when their expertise
and line of business is in something entirely different, money is lost.
Stick to what you’re good at, and find someone else to do the rest.
Best of all, with a little research, it’s not all that expensive to
outsource. Once I started outsourcing my writing, social media, and
administrative tasks to other people who were far better at it than I
was, my time opened up to focus on what I’m good at, which is PR. I now
have the capacity to handle 10 to 15 clients at once, while before I was
capped at six or seven. To sum it up, I’m making more money.
Matt DeCoursey
Matt DeCoursey is the President and Founder of
GigaBook, a SaaS company that provides cloud-based appointment scheduling and client reminder tools to small and medium sized business.
I think the single best way for small business owners to increase their profit margins is…
Taking advantage of the cloud-based services that are emerging in most industries.
Many
of these services offer automation of tasks that are often times
redundant. For example, GigaBook.com helps small businesses take
appointment requests through their existing websites, automates client
and service provider appointment reminders, and can also automatically
invoice clients at the completion of services. The cost savings for
those services, along with the decrease in no-show appointments through
the use of reminders, provides an efficiency that far outweighs the
nominal costs of subscriptions for these kinds of services ($25-$50 per
month).
Kurt Kunselman
Kurt Kunselman, Co-founder of
AccountingSuite,
is a veteran at helping small businesses grow by utilizing technology
with 12+ years of consulting on and selling Accounting/ERP software.
Kunselman co-founded cloud-based AccountingSuite to provide easy-to-use,
scalable business software for startups, entrepreneurs, and growing
companies to manage their finances and day-to-day operations.
I think the single best way for small business owners to increase their profit margins is…
Staying on top of the finances to maximize those profit margins.
Having
the right business application that will support and help your business
grow is the first step. There are so many options out in the market,
from on-premise to the cloud, ranging from applications with only
invoicing to full accounting with order management and
inventory management. There’s no single solution that will fit all,
since every business is unique. After selecting your application and to
supercharge your profit margins, ensure your solution is cloud-based so
you can easily add an accountant or client accounting service without
having to add on a full-time employee or using complicated file
management systems. In conclusion, utilizing professionals and
proactively managing finances with cloud-based applications will
ultimately lead to higher profit margins, no matter what industry you
are in.
Jason Parks
Jason Parks is the owner of
The Media Captain,
a digital marketing agency based in Columbus. Parks has been quoted in
the New York Times, Success Magazine, and Yahoo News. He has assisted in
launching successful digital campaigns for publicly traded companies,
national brands, and local, family-owned companies that have gained
national attention.
I think the single best way for small business owners to increase their profit margins is…
If you are able to get your website to rank well organically on Google, it can drastically increase your profit margin.
Your
business will no longer have to invest a large chunk of its advertising
budget into pay-per-click advertising if users can find your site
organically.
Once you achieve solid search engine ranking
positions within your industry, it will generate new business at an
extremely low cost per acquisition.
Vito Pagano
Vito Pagano is a credit card and merchant services expert and CEO and Founder of
Independent Merchant Group. Before
founding Independent Merchant Group, Mr. Pagano was Vice President of
Bank of America Merchant Services for the commercial/corporate division.
I think the single best way for small business owners to increase their profit margins is…
Credit
card transaction fees have become one of the biggest expenses for small
business owners – both brick-and-mortar and online small businesses.
Monitoring these expenses is one of the best ways to increase profit
margins. Swipe fees from card issuers are the fastest-growing expense
for retailers, while card-not-present transactions typically cost the
seller more – depending on the volume of transactions, the seller’s line
of business, risk factors, and other criteria. So what’s a small
business to do since almost all are in a position where they must accept
credit cards? Here are a few tips:
- Review monthly processing statements:
Don’t just blindly pay your statement each month. With the levels of
fees and surcharges buried in the fine print, it is up to the business
owner to stay on top of it. Or, hire an independent auditor who
specializes in this for assistance. Sometimes the processing companies
are not offering you all the industry discounts and incentives available
from Visa or MasterCard.
- Communicate: Banks
and processors often fail at revisiting the growth or changing needs of a
small business. Merchants must actively communicate with their bank or
processor to avoid erroneous fees and hidden surcharges.
- Make the right choice:
Look for a bank or processor who pays attention to your needs. You
should choose the provider that wants to learn more about the needs,
future plans, or changes for your business.
- Reduce transaction fees:
Be sure to calculate the percentage of your credit card sales which are
going to transaction fees, have an annual review with your processor,
and use up-to-date point-of-sale technology. It could greatly reduce
your processing costs.
Ben Strackany
Ben
Strackany is an award-winning speaker, author, and tech startup veteran
who honed his digital skills with successful VC-funded web pioneers and
with retailers such at Target, Best Buy, Home Depot, and others. He is
the CEO of
DevelopmentNow, a digital innovation agency that provides mobile, web, and hardware solutions to early-stage startups and enterprise firms.
I think the single best way for small business owners to increase their profit margins is…
Cut
costs. Depending on your current profit margin, lowering costs by 10
percent can often increase your profits by 50 percent or more. Review
your monthly expenses, consolidate or outsource staff positions, replace
or negotiate with vendors, and invest in automation or other
cost-lowering technology.
Bob Bentz
Bob Bentz is president of
Purplegator, a mobile marketing agency located in suburban Philadelphia.
I think the single best way for small business owners to increase their profit margins is…
Stop
advertising in traditional media and consider a mobile and digital
advertising approach. We’ve moved so many of our clients away from radio
and print and into geo-targeted mobile advertising. Mobile isn’t
getting its fair share (24% of time spent with media, but only 8% of ad
dollars) right now so there are real bargains available. And, for small
businesses with a limited trading area, you can geo-target your
advertising so that there’s no waste.
J. Michael Cavitt
J. Michael Cavitt is a Connector at
Cavitt Associates LLC.
The company uses the proprietary The Order of Business™, Systems for
Strengthening Relationships™, and The Ripples Model™ to help early stage
businesses and startups; as well as established businesses to create a
solid plan to identify needs, achieve desired results, and build
customer relationships.
I think the single best way for small business owners to increase their profit margins is…
To
clearly ask the best prospect to take action at the opportune time.
They increase their revenue from people they like to have as customers
while not wasting time with those they don’t.
This strategy like
many effective strategies is not complicated; however, it requires
thought and planning; as well as, the discipline to ASK. Most business
owners are not ready to do any and especially not all three of these
actions.
