Many small business owners make the mistake on focussing on revenue instead of profitability. Here are 3 tips to help you boost your small businesses profits:

  • Number Crunch – You probably have a good idea which of your products or services is most profitable, but when was the last time you confirmed your suspicions by getting the figures down in black and white? You might find the process throws up some surprises that you weren’t aware of. Don’t wait until year end to do this analysis. Sit down today and work out how much true profit your business is making on each service or product you provide. You will need to decide if you can cut any of these services or products and what the impact on your profits would be (not revenue, we all know that is vanity, not sanity). Using a great system such as FreeAgent or Xero will help you enormously.
  • Value what you have – It costs considerably more to attract new customers than it does to keep your existing customers happy. If you are spending all your efforts trying to woe new business but neglecting to take care of the customers you already have your business will start on a downward spiral. Quite often word of mouth (be it literal or via social media) is still the most effective way to grow a business. Whilst an expensive marketing boost might add to your revenue figures, your overall profit could well be eroded by the cost of marketing and losing your existing customers which could also damage your hard earned reputation.
  • Understand your costs – Do you have a system for reviewing all of your business costs and what they bring to your business? For example, perhaps you have always paid for a glossy ad in the local newspaper out of habit, but have you actually checked how many customers that ad has generated? You need to be getting maximum return on every pound you invest in your business to see your profits grow.

Don’t wait until year end if you need a hand understanding your business profits. We can help pull together a profitability analysis, review your spending and advise how you can supercharge your business profits.