Have numbers dipped? Whether you lost a big customer, you’re facing a recession, or a competitor took over, you might be wondering how to get your small business profit up—and fast.
You’re not alone. As a freelance writer, I’ve felt anxious as I saw my business’s profit dip. There were slow seasons. Lost customers. Canceled projects. But these challenges only motivated me more. I charged full speed ahead, doing everything in my power to market my business and secure new clients.
If you’re not sure how you’re doing, look at your profit margin. That’s the money you make after paying business fees, expenses, and taxes. As a percentage, it shows how many cents you’re keeping for every dollar of sale. Your profit margin is the best indicator for the health of your business.
Now you don’t need me to tell you profit is a good thing. Instead, let’s talk about how to increase it. Here are a few approaches I’ve tried in the past that have kept me in the green.
Increase your small business’s prices.
When was the last time you raised your prices? If it’s been more than a year, it’s time to reconsider what you charge.
I know it’s nerve-racking, especially if you’re dependent on loyal customers and repeat sales. But don’t sell yourself short. Not only does the cost of doing business increase each year, but you become more experienced. Make sure your prices are in line with the market.
To help transition customers to a new price:
Most importantly, revisit your prices regularly, even if it’s by marginal amounts. Your customers will get used to this and understand it’s a natural part of doing business. After all, a gradual increase is a lot easier to handle than a sudden, intense spike.
Get business insurance.
It might seem counterintuitive—spending money when you’re trying to make money. But an unexpected loss or accident can be devastating during a time when you’re already down. A good business insurance plan will protect you and save your business if damage is great.
Try one of these plans:
Remember, it’s hard to skyrocket your small business’s profit when you face a financial setback. Avoid a bad situation altogether by getting insured.
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Decrease your costs.
Saving a little here and there can make a big difference—and support your profit margin. Here are some key areas where you can consider cutting back, depending on your industry.
Inventory. Sure, you’ve used the same supplier for years. You have a relationship. But is this the cheapest option? Compare the prices of different vendors. Believe me, they want your sale and might even offer you a deal if you tell them you’re price shopping.
Office space. If you work from home (like me), skip ahead. But if you rent an office space, check out the cost. Is it comparable to similar offices in your area? If prices have dropped, renegotiate with your landlord.
Is there any way you can run your business out of your vehicle or home? I’m talking to you, landscapers and contractors. If you don’t need office space, use your home, garage, or basement. You’ll save big time on rent, taxes, and insurance.
Staff. No one likes to cut staff. Instead, think deeply before hiring new employees. Do you really need a permanent employee or can you offer seasonal employment? Hiring during a temporary busy season gives you freedom. You can ask the person to stay if they’re really productive. And, if not, it’s easy to say goodbye.
Try the same approach with contract employees. A contract lets you work with someone for a period of time to test out the relationship—before you get too committed. If it works out, you can always discuss extending the contract.
Get new business leads.
When profits dip, it’s time to reel in new business. Fortunately, digital marketing can help you get new customers without spending a ton of money. Start with your website. If you don’t have one, use a website builder to get started. Then make these enhancements:
Once you have email addresses and phone numbers, follow up! Send a helpful email, ask a question, and keep nurturing leads so they’re more likely to buy.
Make a plan to keep current customers.
It’s a lot easier to keep ‘em coming back than to get new customers. To keep your customer churn rate low, ask for feedback regularly. Try an anonymous survey, a focus group, or ask customers for feedback one-on-one.
Some question to ask:
If you see a pattern in their answers, take note. Then make changes based on customer feedback. Trust me, your buyers will notice and come back.
You’ll get there…
It’s a lot to do, but it’s actually easy to boost small business profit if you take the right steps. Just roll up your sleeves and get to work. You’ll see the cash arrive in no time.
I earned a B.A. in Journalism from the University of Wisconsin at Madison (go Bucky). After realizing my first job might involve carrying a police scanner at 2 am in pursuit of “newsworthy” crimes, I decided I was better suited for freelance blogging and marketing writing. Since 2010, I’ve owned my freelance writing business, EST Creative. When I’m not penning, doodling ideas, or chatting with clients, you’ll find me hiking with my husband, baby boy, and 2 mischievous mutts.
This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry specific professionals who may better understand your business’s needs. Read our full disclaimer
*Harborway Insurance policies are underwritten by Spinnaker Insurance Company and reinsured by Munich Re, an A+ (Superior) rated reinsurance carrier by A.M. Best. Harborway Insurance is a trade name of Simply Business, Inc., which is a licensed insurance producer in all 50 states and the District of Columbia.