Ways to Improve Your Business Profitability

Every businessman or woman faces the question of how to improve and grow their business. No matter how much you generate in sales, there is need to generate bottom-line profit on a constant base. Profit is what provides opportunities for your business future growth and expansion.  Here are my top three tips on how to grow your business and profits over time. 

1. Ask for referrals.

The only way to grow your business and make more profits is to increase your sales and it takes a lot of work to make a single sale. One of the best and easiest ways to grow your sales is through referrals from happy customers. 

image source

Most business men or women assume that if a satisfied customer or their good friend hears of someone who needs their services, the customer or friend will refer them. Unfortunately, this happens less often than you might hope.  Yes, some people can be to shy to ask, but don't let your own shyness or fear get in the way of building your business. Asking customers for referrals must become part of your routine and it cost you nothing. 

When you asking for a referral from a satisfied customer, be sincere and direct. Say something like,

I am really glad that you pleased with my goods or service. I will really appreciate it if you will pass my name along to anyone else you know who would be interested in my goods or services or whatever you do

One last thing, always thank someone who has given you a referral. Either call them, send them a text to keep them informed of your progress and maybe even treat them to lunch. 

2. Raise Your Prices

The most effective and faster way for you to maximize profitability is to get your pricing right. The right price can boost profits far quicker than increasing sales volume, while the wrong price can shrink profits just as quickly.   

But you have to increase your selling price without increasing your cost of goods sold. All factors being equal, an increase in price of goods sold that is not accompanied by an increase in cost of goods sold will increase your profit.  Also, if your products and services are of good quality and your people are friendly and helpful, a small increase in your overall prices will not drive your customers away. 

Though small business owners feel that if they raise prices, they will quickly lose customers, thus offsetting any additional profit they might earn.  

3. Take calculated risks by evaluating opportunities with a critical eye..

For you to be a successful businessman or woman and make constant profits, you have to be a risk-takers. Business and risk go hand in hand. What makes one business succeed, where another will fail has to do with if a person makes calculated or reckless risks. Don’t jump into every given opportunity that presents itself. Take a step back to examine the risks involved. 

Finally, you don't need an degree to build a profitable business. All you need is a willingness to be selective in what you do, who you serve, and how fast you get paid. You can do it.