Increase Your Profitability Now
Whether you want to take your growing business to the next level or hit a financial plateau and need to break out of it, are you ready to make positive changes within your company? Moving your business to be more profitable involves looking at ways to increase sales revenue, decrease your costs, and benchmarking your business to see where you can save money.
Your profit margin is the metric that should always be on your radar. Profit margin answers critical questions about your business:
• Are you making money?
• Are you pricing your products correctly?
Profitability is not just something you should measure; it is a metric that you should continuously improve. “If your profit margins are not rising, chances are your business is not thriving.” Next stop: Profitability.
You can no longer rely on historical revenue trends. Your financial history has no relevance due to the chaos that the entire world is experiencing due to the pandemic. You face a colossal crisis: the inability to apply your data and correctly forecast your business’s future.
How are you going to make appropriate business decisions and develop successful profit strategies? Our suggestions apply to a variety of industries. Chose those that will work for your business.
Avoid markdowns by improving product visibility
Purchase “Season-less” Product. Relying on manufacturers that provide products that are non-seasonal and can be sold year-round is a trend in the market, especially as the seasons and weather patterns are no longer consistent.
Rely on Re-Orders. Working with manufacturers that have immediate availability allows the retailer to replenish goods on an as-needed basis.
Plan Events for Increased Sales. Creating exceptional events, promotions, or parties to elevate sales on specific items – especially seasonal goods – helps make buzz and increased sell-through, thus alleviating markdowns.
Streamline your operations and reduce operating expenses
- Cut overtime and excess staffing as much as possible.
- Focus on discovering areas of waste.
- Minimize supply.
- Streamline your operations by automating administrative tasks.
- Automate repetitive tasks to save time and further reduce your expenses.
Increase your average order value
- What products can you combine into a new offering?
- How can you create a basket or wrap it together to increase the value of each order?
- What items would present an intriguing new offering?
- When customers enter your stores, can they see your most profitable products?
- Are these profitable products on your counter?
- Find your most profitable products and position them in high-traffic areas of your store.
- Promote impulse buys at the checkout counter.
Increase your prices
- Raising your prices will enable you to make more money on each sale.
- If it makes sense for your business, go ahead and raise your prices.
- Figure out your pricing sweet spot.
- Analyze external pressures:
- Competitor pricing.
- The industry average for similar products.
- Price sensitivity of your customers.
- Know if your customers are “price sensitive.”
Optimize vendor relationships
- Engage in Joint Business Planning
- Figure out how you can both improve profitability.
- Identify inefficiencies in your supply chain and find ways to reduce them.
If you *must* discount your products, be smart about it.
- Consider personalized offers
- Identify how large of a discount is necessary to convert each customer.
- Free Shipping, if you are selling heavy items
- 5% off, 10% off, 15% off, and $30 off new products, based on your customer data
- Instead of offering blanket discounts, go through your customers’ purchase histories, then personalize your offers based on their behavior and preferences.
- Doing so won’t just increase the chances of conversion (people are more likely to respond to an offer if it’s relevant to them); it’ll also help you maximize your margins.
Utilize Predictive Analytics
Predictive analytics is highly essential for your business. What are your customers/clients looking forward to having? When? Do you have the right products/services, correct quantities, at the right time?
Predictive analytics uses historical data and current data to make future predictions. In this volatile competitive market, finding the right insights is essential for you to stay ahead of your competition.
You can grow better, produce more profits, and establish your brand this way.
Build a flexible strategic plan
It may seem like a daunting task to create a 2021 strategic plan, but this is a communication tool, in addition to a financial one.
Your team is looking to you for direction. Your job is to clarify your company goals. In these uncertain times, sharing your vision and strategic approach is even more critical to your people – they are looking to you.
When determining your financial targets, try to identify as many possible scenarios based on what you know now and your “best guess” at how different blueprints could impact: customers, supply chain, employees, or other relevant factors.
What makes you unique? Is that brand still in demand? What is your best- and worst-case plan? Share your assumptions for both.
Talking with your customers/clients will help you understand your customers’ needs and challenges and see potential opportunities. This step in the process has never been more critical.
Do your customers/clients want any modifications to your products/services? It would be best to inform your strategic decision-making team of what you learned from your customers/clients.
In this environment, monthly reviews are the most suitable, not quarterly ones. Encourage your strategic planning team to focus on thinking about the last few months’ events and what they have learned that might impact their strategic projections.
Seek your employees’ perspectives
Create platforms and virtual meetings to support company-wide innovation. Inspire employees to share their suggestions/ideas. Establish your business culture that values new ideas and creativity.
Promote an environment in which everyone feels comfortable bringing new ideas to the table.
Cost-cutting will be required to reach profitability. Your SME team will be the best source for ideas for streamlining processes and boosting productivity. Use optimization tools to verify suggestions have the expected impacts.
Simplify your decision-making process. Adopt agile principles for the performance of your modifications/adjustments. Be nimble. Convey your sense of urgency when changes are necessary.
Once you have chosen strategies to make your business more profitable, you should prioritize them in order of importance. It is good to write down your goals and the corresponding strategies to achieve them, and how you plan to implement your strategy.
Your products or services with the highest gross profit margin are the most important to your business, as they generate more money.
Once you have identified your most profitable items, you should concentrate on achieving higher sales targets for them.
Your improved profitability may require you to rethink aspects of your business or to devise strategies for improvement. Consider using a business adviser to help you.
Keep your pipeline to customers open. Launch automation to create as a means of knowing your customers’/clients’ satisfaction with your products/services. Be open to anything that will improve your customers/clients your responsiveness.
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Plan! Adapt! Manage! Succeed!