Eight Tips to Boost Your Business' Bottom Line
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Bankruptcy rates may be down in many of the nation's cities, but the companies that have stuck around are still getting hit where it hurts: their bottom lines.
Nearly two thirds of small businesses either watched their profits stay flat in 2010, or they didn't register a profit at all, according to a year-end economic report from the National Small Business Association. That's in spite of nearly half of owners saying they saw revenue growth.
The numbers represented an improvement from 2009, when three-quarters of businesses saw no growth in profit. But the picture still isn't good.
A thriving business should be throwing off more cash as it matures and entrepreneurs learn more about how to manage their business. Growth shouldn't come at the expense of profits, either.
What can you do to get profits growing again? Profit-management expert Patricia Sigmon, author of Six Steps to Creating Profit, offers her six tips below, and I've added a couple of my own:
- Change the rules. In today's marketplace, Sigmon says, you'll need to generate more sales while at the same time reducing expenses, especially administrative fat. To grow sales without adding costs, try cross-selling -- offer new services or goods that complement your current offerings, such as a chiropractor selling vitamins. To cut costs, see what processes you can automate or outsource.
- Stay visible and connected. Whether it's getting the most up-to-date certifications or taking your brand online with a social-media campaign, face competitors head-on. Extend your visibility and keep costs down by partnering with complementary businesses for advertising.
- Maximize your cash flow. Smooth out the peaks and valleys of income by offering prepaid payment discounts or monthly subscriptions. On the accounts payable end, make sure your payments are on time to avoid fees and late charges.
- Streamline management costs. Sigmon advises automating accounts receivable, customer-lead management, and employee-productivity tracking. Coordinate real-time tracking of these figures so you know who's pulling their weight -- and who is dead weight.
- Market smart. Use the Internet to maximize your marketing, whether it's an attention-getting social media campaign or a Webinar. Advanced customer relationship management software can help you measure return on investment for your online marketing campaigns.
- Make everyone a salesperson. Anyone in your company who has any customer contact should know your offerings -- and how to treat customers.
- Tighten your credit terms. If you have too many late-paying customers, revise your credit terms and offer less credit. Consider using a collections agency to get stragglers in, or charge a late fee.
- Lose the lease. There are so many flexible work options now -- from co-working spaces you share with other companies to letting workers telecommute part time or just plain stay home. Explore how your company could lighten its fixed costs by lowering its real-estate commitments.
How will you grow profits at your business this year? Leave us your tips.