If you’re worried about taking drastic measures to increase your small business’s profit margins, consider the three ideas below to reduce expenditure and make your business a financial success!
1. Take Steps To Cut Business Costs
As the saying goes, every penny counts. Take time to think about your cost reduction strategy, where are the best areas to cut costs?
The average annual electricity bill for UK businesses is £3,061. Energy and utility bills continue to rise, but managing consumption is an easy way to keep costs low.
- Consider Switching Energy SuppliersIf it’s been a while since you’ve looked at your business’s energy plan, it might be time to compare rates and see if you can find a better deal.Money Saving Expert has great advice for finding the best price for your small business.
- Go GreenLED lighting has become more affordable and offers several advantages to businesses. Whilst consuming less electricity than standard incandescent lightbulbs, LED lightbulbs also last longer and are considerably cheaper options.Continue to decrease your electricity bills by switching off computers, heating and lights each night and over weekends. Small businesses using little energy are often eligible for certain reliefs or tax exemptions. You can apply for schemes that will help demonstrate that you are operating efficiently and reducing industry waste.Reduce costs further by decreasing your paper use. Printers alone are costly commodities, so you’ll also cut spending on printer maintenance, ink and toner.Technological advancements have made going paperless far easier. Documents can be digitised to electric form and lots of companies now offer secure online document management systems for your businesses paperwork.
2. Implement A Marketing Strategy to Increase Exposure and Sales
Consumer shopping behaviours have changed. Now more than ever people are using technology and social media to interact with their favourite brands.
- The Power Of Social MediaWith the growing popularity of social media sites, dedicating time to create an online presence provides your small business with a cheap way to strategically connect with customers and network efficiently.As there are several popular social media sites out there, it’s a good idea to research each channel’s demographics and work out which ones will work with your own customer base. On average, how old are your customers? How are they looking for products in your niche?Once you’ve figured out which social channels to optimise, start to promote user-generated content being shared about your products with your followers.
- Email MarketingAs a low-cost option with large reach, email marketing is a great option for small businesses looking to increase their profit margins.Creating compelling content with a personal touch will result in customers feeling more valued, increasing their awareness of and loyalty to your brand.MailChimp is one of the most popular marketing automation platforms. Free to use for certain features, it allows you to send up to 12,000 emails per month and publish email campaigns, landing pages and Facebook & Instagram ads.Such platforms provide measurable results that will allow you to analyse how your customers are interacting with your emails.Tip: The General Data Protection Regulation came into effect just two months ago, so it’s important that your email marketing is compliant. Ensure you have consent to send out marketing information – the last thing you want to do is put customers off your business by spamming their inbox with emails they didn’t ask to receive. For detailed insight on the best practice for email marketing under GDPR, refer to Mailjet’s Toolkit.
3. Reconsider Your Pricing
Raising prices seems like an obvious way to increase sales, but to be successful needs to be carefully planned and executed. Customers may resist high prices, and such increases could turn people off your brand.
- Upselling And Cross-SellingGet into the minds of your customers, do your research gain greater understanding of their needs and what they require more of. Ask questions on social and gain data-driven insights into their browsing behaviours.Do you sell more expensive versions of your popular selling products or services? If so, it’s time to promote these.Tip: when it comes to both upselling and cross-selling remember not to be too drastic. Try to avoid recommending products or services that are over 25% of the original intended buy.
- Increasing PricesDo your research and tread carefully; consider the elasticity of your products and how much revenue in sales you’ll lose if less people decide to go ahead and buy.Are you matching your prices with your suppliers’ cost rises? If not, you should be. Small businesses worry about increasing prices, but often their closer connection with customers puts them at an advantage. If your products / services are good quality, a 5-10% price increase is unlikely to cause a fuss.Tip: It’s important to maintain transparency to sustain a relationship of trust. Choose your timing and make sure that all price increases are announced in advance. Support the increase with good reasoning, positive benefits and product promises that you’ll deliver on.
It won’t happen overnight, but these 3 ideas should inspire you to make changes that will quickly see your small business financially thrive!