5 Ways to Increase Profits in Your Business

Increase Profits

When you are in business the whole idea is to make a profit. However, with the necessity of suppliers, infrastructure, payroll and even tax, there always seems to be a payment that needs to be made, thus reducing your profit levels. Rather than watch your business sink into the red, you can find ways to increase your profits and ensure your bottom line is healthy.

There is more to increasing profits in a business than just cutting costs. Some costs cannot be cut, but that doesn’t mean you should not keep a tight rein on spending. Unnecessary expense is a waste, but essential spending can cut down on time and increase your profits. For instance, purchasing the right software to do the accounting can certainly benefit your business; buying the latest and most expensive office furniture will not.

Five simple keys to increasing profits in your business are:

  1. Leads – these are your customers or potential customers, people who have contacted your business or who have been contacted by your business. There are two ways to increase profits with leads and that is to get more of them and to increase the spend of each one. It is imperative to give people who come to your store a great experience without being pushy.

  1. Conversion rates – conversion rates is about getting people who seem somewhat interested in your service or product to become customers. Your store – whether it is online or not, will have a certain number of people walk in, but not all will buy. If 5 out of 10 buy something your conversion rate is 50%. Increasing this will increase your profits. It is important that your business is presented professionally and that leads can see at a glance what you offer and how it will benefit them.

  1. Average sale price – this is the price customers pay for your goods per annum. It might only be a few dollars, or it could be thousands, depending on what you sell. Offering discounts will often get you a sale, but offering a higher priced item that has more value to the consumer will be even better. You can often add value to a service by offering them something extra that they will need in the future.
  1. Number of transactions over a year per customer – this will vary considerably depending on your business model. You can prompt more sales by keeping in touch with customers in a friendly way and letting them know of sales and discounts or new stock as soon as it arrives. Many people like to be the first to know and buy new stock.
  1. Profit margin per sale – it is important to know just what your profit margin is on any one purchase or service. Low prices may bring in more customers, but they will also lower your profit margin unless you can buy cheaper. Sometimes this is possible and you can pass the savings on to your consumers. Your profit margin on a sale item is usually lower, but consumers often buy more because of what they just saved. It is a good idea to have these other items near to the sale item. For instance, if beach towels are on sale, have other beach accessories or clothing nearby.

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