A fact of business life is that more than half of small businesses did not make a profit this last year or were unable to increase their profit over previous years. This situation is not necessary according to Exigo Business Solutions. These folks specialize in maximizing small business profits starting on day one. From Exigo to you, here are five good ways to increase profits in your small business.
The most basic formula for business success is to increase sales while reducing overheads. Approaches as simple as cross-selling, like a beauty shop selling shampoos and conditioners, are tried and true money makers. Also, businesses can provide service plans instead of one-time payments. Many people will find it attractive to be paying a lower rate per hour for services even if they need to pay you more up front. And, the fact of the matter is that many times the person will not use up the entire service plan, thus increasing your profits. However, most small business owners have thought of and tried such approaches. Their problem is not one of making money but rather spending too much on overheads.
There are lots of ways to reduce expenses. For example, there are times when you can outsource your bookkeeping and it can pay for itself. The first thought that business owners might have is that he or she will be paying more to have the books done. But, the fact of the matter is that by outsourcing your will be getting a fresh and professional approach that may totally turn your business around. Such an approach is the Profit First method. The folks at Exigo Business Solutions are Profit First Professionals.
The first step with the Profit First system is to allocate your profit on the tenth and twenty-fifth of every month. The way this works is that Profit First rewrites the standard bank balance accounting formula.
Income minus expenses = profit is how your bookkeeping usually keeps track of your finances. But Profit First turns this around and writes Income minus profit = expenses.
How is this? The fact of the matter, as we mentioned, is that the common small business problem is not a lack of money coming in the door but a lack of cost management. When you work with the folks at Exigo Business Solutions to institute Profit Plus you start by allocating profit to a separate bank account and then using the best small business accounting software, QuickBooks, you track your finances and produce insightful and actionable reports.
With your new information in hand, you will be able to cut costs where necessary and keep a better eye on cash flow.
When you or any of your employees have certifications, licenses, or accreditations, these should be displayed prominently at your place of business. And, in today’s internet era you need a website and a social media presence where you can also show the world that you know what you are doing and have proof in the form of licenses and more.
Blogging on social media can be a great way to find new business and to promote your skills to gain more work. This new arena is also a place to find new business contacts and form useful alliances such as shared advertising.
And, for those old advertising campaigns and associations that are costing money and not bringing in fresh business, let them go!
Whether you are selling products or services, getting paid up front is always better for cash flow. Ways you can achieve this are by using pre-paid retainers or perhaps membership plan where buyers get discounts throughout the year but you get their membership money on January 1. Businesses that do this really well do not have to borrow money because their customers send them a large lump sum at the beginning of the year.
And, as with all business operations, accurate and clear bookkeeping reports such as QuickBooks Custom Reports allow you to efficiently track cash flow and better manage where the money goes and when.
Parkinson’s “Law” comes from a Brit named Parkinson who had worked in the British Civil Service. He observed that the time taken to complete a job tended to equal the time that was allotted for completion. A corollary is that the amount of money spent on any project will tend towards the amount that was budgeting. These “laws” have to do with human nature and that human nature operates in each and every business.
When you work with Exigo Business Solutions to implement the Profit First system in your business you will immediately start seeing a profit because you will allot money for profit twice a month. Then you will institute effective cash management and budgeting. This can happen when you use a bookkeeping tool like QuickBooks which was designed for small and medium-sized businesses. When you routinely take a profit you may need to reduce costs and that means hitting Parkinson’s Law head on. When jobs are taking too long and costing too much the answer is to reduce the allotted time and the allotted money. Then, of course, you need to track the results. But, more often than not, closer attention to these details will result in lower costs. Then you will have even more money available for profits.
Automating your business processes such as using QuickBooks reminders for overdue invoices helps you keep track of overdue bills but it also reduces the time and money spent doing such jobs manually. Contact us at Exigo Business Solutions and we will be happy to help you find more ways to automate your business processes and maximize your profits.