Have you ever wondered how to truly gauge small business success?
When you start a small business cash flow is a prime objective. But ultimately, you’ll want to work towards profitability. It is best measured by taking a look at your income and expenses, using an income statement.
Yet, often times glancing at financial statements don’t provide the direction you’ll require. Entrepreneurs need practical advice and tactics to impact their financial picture. So we asked, ten successful entrepreneurs to share their best tips on how to improve small business profitability, and here’s what they had to say:
1. Market to your existing customer base.
“The fastest, easiest and most profitable way a business can improve their profitability is to reach out to their existing customer base with an offer to make a repeat purchase. The offer must be related to their initial purchase, restricted to “preferred customers” and remain active for a limited time. Done correctly, it’s not unheard of to see a boost in sales ranging from 30% and higher in less than a month.”
– Charles E. Gaudet II, CEO and Founder of Predictable Profits
2. Strategically leverage social media.
“We have utilized and engaged social media over the last 18 months to leverage and share [our] message with creative content to our audience and build brand recognition. With product specials, updates, giveaways and incentives the new and existing customer is rewarded. This has helped to enhance the 360 degree brand experience and increase our customer traffic, both in-store and online, on a daily basis.”
– Allyson Ames, CEO and Founder of Wonderland Bakery
3. Focus on selling products and services with the highest gross margin.
“Get a niche and concentrate on your highest net worth service or product. Take a minute, sit back and review every piece of your products and services. Is there one where you get the highest return for your money? Gear your next advertising or social media strategy towards your findings.”
– Erica Arrechea, Marketing Consultant for Arrechea Group
4. Minimize your overhead.
“Take a good, close look at your overhead. It’s easy to brush off a little extra expenditure here, a little extra there, but all those little extra charges add up faster than you’d think. So many services that used to be a standard part of any business’s overhead can now be done cheaper online. Phone services, fax services, file sharing services — these can all save you money and eliminate bulky office equipment if used completely online, which means you need less space for your business.”
– Anthony Lolli, CEO of Rapid Realty NYC
5. Fine tune and optimize your staffing plans.
“Starting a small business is all about eliminating overhead. My company, TeliApp, builds mobile application and, thus, has little relative hardware expenses. To insure our success, avoiding extra or unnecessary employees was essential. I put a great deal of effort into the hiring process, making sure that all my employees were versatile, highly qualified and committed. This allowed me to keep a tight, productive team without wasting overhead on excess employees.”
– Joshua Weiss, CEO of TeliApp Corporation