By Melisa Cammack
In business, profitability is a key measure of success as it involves all factors from having a strong business model, to repaying lenders and investors. Profitability determines a business’ long-term continuity, and undertaking small changes in the operation of a business can lead to significant profits without compromising the business budget and structure. Here are five tips to help businesses maintain profitability in today’s economy.
Focus the business’ marketing and support efforts on the most profitable customers. Limit spending on less profitable clients to increase the impact of the company budget and increase the business’ overall profitability. Determine the customers with the greatest impact on profits and seek ways of courting them. For consumable goods, call clients who have not made their routine orders and offer discounts on purchases.
Increase Average Orders
Increase the business’ average order value by using strategic promotions and offering complimentary product offers. Offer buy-one-get-one-free offers and free gifts and discounts on bulk purchases. These promotional strategies encourage customers to buy additional goods to save on purchases and can increase the company’s overall sales and inventory turnover rate, enhance customer loyalty and make the business stand out from the competition.
Company Credit Cards and Debt
When business owners transfer credit cards, they move debts owed to the current credit card company to another one. This option helps business owners reduce debts faster and save money. Two strategies that credit card companies use to lure their competitors’ customers are offering low introductory rates on balance transfers, and offering the best frequent flyer credit cards. Transferring the balance from a high interest credit card with a low introductory rate can help individuals clear their debts faster. In addition, business owners save money on purchases provided the current interest rate is lower than that of the previous credit card company.
Align employees’ efforts with the business and its mission to increase profitability. This means staff should think about decreasing costs and increasing revenue while maintaining quality. Explain any changes you make to employees to allay fear and anxiety. Company resources should be reassigned to projects that offer the greatest returns.
Businesses should treat marketing as a primary asset, and since digital marketing is a relatively inexpensive strategy, any business can use it to focus on their target audience without too much effort. If enough research is done on a specific audience, they can be catered to online without spending a lot of money. The greatest digital marketing resources are social networking sites and search engine optimization because of their huge potential to reach a vast market.
Melisa Cammack and her husband have been business owners for almost 10 years in central Seattle, but recently made the move to Western Australia. She is the mother of three children, and loves the constant chaos of everyday life.