How to increase the profitability of your small business
- 27 Feb 2023
With 50% of small businesses failing within the first five years, ensuring that your business stays profitable is key. If you are a small business owner and are looking for ways to increase your profitability then here are a few things that you may consider.
Use high-quality suppliers
Using high-quality suppliers could result in better outcomes and increase your client base which will increase your profitability. This is relevant to the majority of businesses from web developers to salon owners. For example, if you own a salon then you should look to source your products, such as acrylic nail sets, from professional suppliers to ensure quality for your clients.
Providing great results, no matter your business, will result in happy customers who are more likely to leave a good review or refer you to their friends or family.
Reducing costs is a key way to increase the profitability of your small business. There are a range of ways to do this so you should consider what your biggest outgoings are and if they can be reduced without affecting your business negatively. Some of these include:
• Exploring alternative locations for your business
• Consider online marketing
• Use part-time and freelance staff
• Review any service or premiums up for renewal
• Seek small-business tax relief
By ensuring that your business runs efficiently, you will increase the productivity of your processes and your staff which can give you a competitive edge.
Automating as many operations as possible is an easy way to boost the efficiency of your business. You should consider what processes take up a lot of your time and then search the software market for specific areas of your operation.
For example, automated HR systems can be a great way to save time by freeing up employees for more valuable or complex tasks. It can also reduce the amount of money that you have to invest in your HR team as experienced HR employees will need a competitive salary and benefits – something that you may not be able to supply as a small business.
Consider your USP
A unique selling point, or USP, is a business identity that makes you stand out from your competitors. If you are part of a saturated market, this is all the more important as you need to make customers choose you over another business that offers similar services. A good USP will encourage consumers to use your business and increase your profit.
A good example of a USP is Glasses Direct, which offers a free home trial for glasses. Unlike other glasses brands where you may need to visit the shop or just order a pair of frames and hope for the best, the company allows customers to get 4 frames delivered for free to test them out.
To create your own USP you should consider what can help you to stand out. You could focus on sustainability in your business model and may look to profit from this by advertising this to potential customers.