Monday 29th Oct 2018
If you’re in the process of writing out your new business plan, you’ve just started a new business, or you have one that’s been operating on a micro scale for some time, then you’ll no doubt be interested in what is generally the biggest concern for small businesses - how to grow in size in a profitable and responsible way. As a result, we’re going to go through a few quick tips right here that can be applied to just about any business.
Cut Your Overheads
It’s very simple - profits increase as overheads decrease. Increasing revenue is often harder than reducing your costs, so this is often one of the very best places to start. Go through your accounts - or planned accounts - and try to identify any areas in which you are spending money that isn’t really essential, or areas in which you think you might be able to make some savings. Sometimes all it takes is a phone call with a supplier or utility company to trim some of those overheads, particularly if you’ve been loyal to them, or you haven’t already enquired about any discounts they may be able to give you.
Tweaking Your Offering
Can you change your offering slightly in any way that might make it a bit more profitable without doing anything drastic? This often means really considering your pricing structure. Sometimes reducing the price of your product or service will increase volume and therefore profits, and sometimes increasing the price will increase profits without having too much of an impact on volume. You will need to do your research on this, though there are good resources out there. You can also consider ways of making the product cheaper to offer that won’t impact how much of it you sell. For example, big technology companies have people dedicated to finding cheaper components for what will be exactly the same product as before.
Expanding Your Offering
If you’re an established business, looking for new avenues to explore may well help you bring in additional revenue and therefore profit. Consider what you’re currently selling, whether it’s a service or product - is there a similar offering that you could bring in alongside this? You can make things more profitable by using what you already have in order to diversify, whether this is expertise within your team, or contracts with suppliers. As an example, you might be an online retailer of jewellery - can you use your casting company to launch a new line? Or if you’re a professional services company, do you actually have unknown talent in the team already?
Capitalising on Opportunities
Great opportunities don’t present themselves everyday, but when they do, they can make a big impact on your bottom line, and you want to be prepared for when the time comes. If you get an application from an outstanding job candidate, or your city launches a festival that you could be part of, then you need to be ready to go for it, as these opportunities could be ones that really help you grow. As part of this, you’ll probably need good cash flow to be able to take advantage, so read more of our articles on the subject to find out how this can be achieved.
Long- and Short-Term Planning
Finally, if you want to grow, you need to know where you’re going. We’ve just spoken about taking advantage of new opportunities, which is great, but you should have a destination and method in mind at all times. Take the time to establish a plan for both the short and long term, just as you did when you were first setting up the business. This will help keep you on the right track, and will also allow you to see exactly where you’re at.