Two Ways to Increasing Profits in New Year!
As the year is coming to an end, many companies are thinking about and planning ways to increase profits in the coming year. If growing your profits is important to you, then this article was written for you!
In this article, I will ask you a series of powerful questions. These questions are centered on the most basic (and most significant) profit-drivers for a business. Specifically, the questions will address:
- Increased Pricing
- Increasing Sales
In answering these questions, it is likely you will get several ideas on how you can grow your profitability in coming year. Remember, growing profits does not necessarily mean that you have to work harder. Sometimes, we just need to work smarter.
Here are the powerful questions in each of those areas for you to consider and answer truthfully:
- Increased Pricing
- What processes do you use to determine what prices to increase? Many businesses randomly increase or leave prices the same based on what they think their clients or customers can afford. Having a process for analyzing which products or services are costing your business more to provide is one area to address. How do you know what the price needs to be in order to make a profit if you don’t know what it is costing your business?
- The last time you increased pricing, how did it affect your business? Did you lose any customers or clients because of it? What process did you use to determine the price increase? Is the process viable to use again? If not, what will you do differently this time?
- What is your company’s net profit margin? If you increased your pricing slightly (by 2–5%), what would happen to your net profit margin? Could this increase the passion you have for your business?
- Are you discounting your pricing? If so, what is the process for determining if a discount is applied? If there is no process, are just giving money away?
- Do your salespeople have a sales process? Many businesses have salespeople who keep selling the way they have always sold. Is there a better and more effective process? Does everyone use the same process?
- As your own costs of doing business have risen, what have you done with your pricing to be able to maintain your margin (or improve it)?
Have a system and process that collects the data in terms of each product or service cost versus selling price.
- Is it time to consider raising some or all of your pricing?
- Increasing Sales
- Are your salespeople earning new business, or have they settled into just being order-takers? What systems and processes are in place in order to track the sales cost versus sales produced?
- Do you have an effective Selling System, or Sales Process or are your salespeople flying by the seat of their pants? The system or process needs to have a method for tracking sales performance. A consistent and effective process will allow your business to grow and determine if you have the best sales people for your business.
- Having a system and process for tracking your Top 10 prospects is imperative. Are you ignoring the larger prospective accounts that could make a big difference in your sales revenue? A CRM system can help you to better track your initiatives. Providing quotes and proposals to unqualified prospects can drain your business and look like your salespeople are busy.
- Do you have systems in place to follow-up with lost customers to earn their business? When we lose a customer or client there many times is an easy solution as it may have been a misunderstanding or something that needed clarification. If it is only based on price, they are probably not a good customer or client anyway.
- Are your salespeople digging deep to determine what other products or services you could offer to your existing customers or clients? Many times customers or client may not know what additional products or services we provide if they are only using a portion of what we provide. What can you do to educate your sales people and your customers or clients on these additional products or services?
- Are your marketing systems and processes consistent throughout you business? By tracking whether a marketing effort is creating a viable return in sales, you can determine if your marketing investment is worthwhile. A CRM system can help your business to track the marketing efforts along with the sales efforts. What return are you receiving today and what will you do differently?
- A marketing message that generates an interest by your prospects is only the beginning of your marketing. When we send out message that are not consistent, it causes prospects to question whether our products or services are for them. How we address them specifically is a big plus. You need to know whom your ideal customer or client is. Is your marketing message fresh and relevant, or are you just using the same message you have always used?
And now, the most powerful questions of all:
What are the profit-killers in your business that you know you should fix, but haven’t had the time to address? What are you going to do about it NOW?!