No matter what business you’re in, your most crucial sustaining factor will be profitability – not just for survival but for any form of future growth. What companies don’t realise is that there are some very simple measures to help you add a little bit more to your bottom line.

If you want to make it as a business, you should be aiming to make a profit on every sale you make. Whether you’re dealing out a product or a service, you want to be getting maximum value out of each transaction and at minimum cost it takes to provide that product or service to the customer. From there, you can invest your profits in all manner of new assets and opportunities to take your business to the next level.

We’ll take a look at some of the more basic tactics before going out and considering your business in its entirety. First, the most straightforward one of all – that dual relationship of price versus cost. Since profit per sale is price minus cost, you can start by trying one of these strategies.

Get Smart On Pricing

In our preview issue, we examined the trend of raising your prices. Wise, or just plain dangerous? Particularly pertinent in today’s climate of inflation, we found that the decision to increase prices is far more complex than it would seem to consumers. Sellers are in fact usually wary to resort to price rises, for worry of backlash and lost business. But while charging higher prices is a tricky issue, it is supposed to spell good for the business. When done right, it helps tighten and focus your target customers. It’s a case of sacrificing the price-focused ones so you can know who your real customers are. These are the buyers you really want to cater to, and you win yourself the extra capacity to spend time and effort on them. Look into ways of improving your offerings to extend them extra value and thus appropriate compensation for your work. This is providing maximum value with minimum cost and effort.

Just be sure to remember a few simple rules:

- Be sure to explain to your customers why you are raising prices. Whether it’s rising costs or new additional services, you must justify the move in some form of announcement (for example through direct mailers, newsletters, flyers and so on). Remind them what makes you a special or strong provider, and remember to thank them and encourage their support.

- Don’t overdo it. Try to be minimal in your increases, or stagger them to make the change more palatable for your customers. It is also generally not recommended to raise prices across the board. Try to do so with your strongest, best-selling offerings, or carry it out on a gradual basis, starting with one area first, and following up on the others.

- Don’t fall for the lure of price-cutting. Under-pricing has hurt many a seller because it can lead to price wars and losses. However, you can take advantage of discounts and bundle-pricing poor sellers with other products. This will help you eliminate extra inventory and gain back some dollars.

Trimming The Fat

– Tackle Costs - Outsource It! Focus is key in business – if there are areas you’re not doing too well in, you might want to consider leaving them to an external party who can do the job more effectively and efficiently. That way, you get to concentrate on your strengths, saving time and perhaps cost as well. If this is an avenue you’re considering, you’ll need to carry out research of potential companies and vendors that might be able to come in and help you. Speak to each of them and and consider carefully the numbers and terms involved to see if they can indeed be beneficial to your situation.

- Always look for a good deal. For every expense, make that effort to learn the market and make comparisons. Then you can make informed decisions on what’s standard and what’s affordable, and what you, as a client, should expect. With the Internet especially, it’s easier than ever before to get a good idea on prices and available options. Don’t be afraid to negotiate with suppliers as well, especially if you’ve been trading with one for awhile. Remember, they want the assurance of your business, so ask what they can offer to keep you from looking at alternatives.

- Go green! Yes, it’s quite the buzz these days, and why not, since you save both the environment and your own costs. A win-win situation, but of course, as a leader, you will have to make an effort to get the movement started before it becomes part of your business. The most common ways you can get onboard are with reducing your use of paper, energy and water. Talk to your staff and get them motivated to join you on this – you should be the one to set an example. Print only when you have to, and remember – double-sided makes a difference! Consider paperless meetings, and try to buy only recycled paper. To save electricity, purchase power-saving electronics and appliances, and encourage staff to shut off main power plugs when not using them, as well as to put their computers in sleep mode while out to lunch or on breaks. In fact, if you can, try to turn off the air-conditioning during those times too while you’re at it!

Missed Opportunities?

Every business has hidden assets they’re not making full use of, and most often, it’s in the form of people, namely, your customers.

- Encourage word-of-mouth. Never underestimate the power of this simple form of marketing! Have your satisfied customers help you generate exposure and boost sales by offering them perks or discounts for referrals. Get recommendations from them, in their own words, and place them on your website and on your advertising.

- In spite of the previous point, it’s generally easier to focus on existing customers rather than gaining new ones. What you need to do in this case is find out if there’s anything else you could be doing for your patrons that you aren’t yet. Speak to them to find out their opinions, their wants, their likes and dislikes. This can give you ideas on expanding your current offerings, or finding new offerings, to provide, thus gaining a larger sale per customer.

- As a business, it’s likely that you engage, or have engaged in some form of advertising and marketing. The question is: do you know exactly which campaigns helped sales the most? It’s important to track your marketing so you can find out what works for you and what doesn’t. Survey your customers to analyze which channels were the most effective at linking them to your business, so your next efforts can be accurately targeted, and hopefully boost those profits.

The business that has the strongest chance at maximising their profit margins is the one most in tune with the market. Knowledge is what will help you weed out the areas you can take advantage of, hence learn whatever you can about your industry, your competitors, and most of all, your customers. Open up every means to gain feedback from them and to relay important information back, from your online presence right down to the frontline staff.

In order to stay financially sound, be strict with monitoring and reviewing your income and expenditure. When you have your books and records in order, you’ll have a better picture of your own volumes, wastage and levels of use – and a better idea of clever, cost-efficient ways to try next time around.