5 Ways Small Businesses Can Increase Profits in 2021
Looking to increase profits for your small business this year? Consider the following strategies.
2020 was a year that blindsided many small and mid-sized businesses. From dealing with new public health orders to closures, and numerous other challenges, companies were stretched to their limit as they struggled to keep up with COVID-19 curveballs.
Given all that, increased profits and cash flow is understandably a significant source of anxiety in 2021 as business owners strive for profitability. Profitability can be seen as a two-part process: ensure your business is lean and agile while retaining and expanding your customer base.
Here are some strategies to increase profits for small businesses in 2021:
Sell to existing customers
You’ve probably heard of the time-old statistic which states that it costs 5 times more to attract a new customer than to retain an existing one. Take advantage of your email list (contacts who are already in your customer base) by offering them additional products or add-ons to a product they already own. Engaging with your current customers thorough email is a cost effective strategy. You should gather customer data, send newsletters, special discounts, event invites, and more to give your satisfied customers reasons to keep coming back, make purchases, and contribute to your revenue flow. The bottom line is that if your company isn’t cross-selling and upselling—and engaging—existing customers, you’re leaving money on the table.
Get your business systems connected
When businesses use multiple single-function solutions to operate, it leads to disconnected systems and business leaders can only easily see data related to individual processes. This leads to manually relating data between silos – which can be a time-consuming and error-prone process. Disjointed systems cause workflow bottlenecks, a decrease in employee productivity, customer service breakdowns, and more. It also raises other issues: when companies lack a unified view into their operations, they either make critical decisions too slowly or make risky, hasty decisions that are not based in data. Profitable businesses invest in the automation they need to reduce cycle times, close their books faster and simplify the quote-to-cash process
Encourage referrals & positive reviews
According to Nielsen, 92% of people trust recommendations from friends and family over any other type of advertising. Encourage positive word-of-mouth buzz by asking your customers to refer or recommend you to others. Offering a little incentive like a discount or reward for bringing your new business is an effective way to attract new clients and grow your revenue.
Another way to increase conversions for potential customers is to keep an eye on review sites and respond to any reviews your business receives – positive or negative. Some 45% of consumers say they’re more likely to visit a business that responds to negative reviews. You should also be sharing positive reviews on your website and social media channels. Finally, encourage reviews from your happy clients by sending them an email with a request and incentive.
Reduce operational costs
Lowering expenses is another way to make your profits increase. There are a number of ways to do this effectively, without affecting the quality of your product or service. For instance,
Comb through your business expenses to find areas of potential waste. Eliminate tasks and activities that don't add value to the company or customer.
Have a look through your business to identify areas where you could improve efficiency.
Consider new technologies and services that can help reduce your overall operational costs.
Check out our blog post for more ways to cut costs for your small business.
Invest in digital marketing
You can grow your pool of prospective customers with low-cost digital marketing. Begin by ensuring that your website is updated and current, and optimized for search engines like Google and Bing. In addition to SEO, your website should provide different avenues of connecting with any visitors – does it link to your social media channels? Do you have a chatbot? Is your contact information visible? Are there any contact forms that visitors can fill out? One study found that 78% of all local mobile searches resulted in a purchase. Your small business not only needs to have a professional web presence, but your URL must be a top search result when consumers near you use their mobile devices to find your services.
Now more than ever, increasing profits is vital for small businesses. Conduct an audit of your expenses to identify if there are any costs you can quickly eliminate. To increase your sales, don't forget to use cost-effective options such as growing referrals or upselling to current clients. Finally, consider long-term options like investing in new technology (like cloud ERP) for sustained growth.
Find out how Kwixand Solutions can help your small business.
Kwixand Solutions is a Microsoft Dynamics 365 Partner based in Vancouver, Canada. We help small and mid-sized companies across various industries digitally transform and achieve their business goals. Learn more about us, or discover how we can help by getting in touch with the team.