7 Proven Ways to Increase Your Start-up Profitability
One of the major reasons why start-ups fail is because the owners focus so much on making profits that they fail to put customer’s satisfaction and the growth of the business first. However, though profit should not always be the foremost goal for owners of start-ups, if you’re running a business without profits then you are headed for a business shipwreck. So how can you effectively increase your start-up profitability without warding off your customers or crippling your business?
Here are 7 effective ways to increase your start-up profitability without losing your potential customers or collapsing your business.
1. Focus your Resource on Your Potential Market
As a newcomer you can’t serve everyone, this will demand too much from your business. An attempt to serve everyone is no different from using a leaking can to fetch water. Identify your potential market and channel the most of your resources there. You risk losing opportunities when you fail to identify your potential market, and this will reduce profitability. Before starting your business take time to not only identify but also study your market, understand their demands and preference. With this well-drawn out and followed you won’t have to lose your customers while chasing the wrong targets. This will cut down the cost of running your business since you won’t be spending for the wrong purposes; and of course, reduced cost of management means higher profitability.
Advertising is an indispensable tool for all start-ups, and your tender business cannot survive without it. If you are entering the market with a new product or service, then the consumers of your product or service have to be aware of your presence, and this is what advertising is all about –creating awareness. Entering the market with an aggressive advert strategy is a forceful and effective way of increasing your business popularity among customers. The more they know about your products and services the more your brand is promoted. Of course, when your brand is recognized and popular among consumers increased profitability is certain.
Some businessmen avoid taking advantage of advertising because they consider it too expensive and not worth the cost. This is a flawed idea; adverts can be done effectively at relatively low costs. Using posters and banners that got excellent designs will imprint long-lasting images in the minds of your target market and this can do a lot for your business. Making good use of social networks platform costs about nothing yet do extremely well to put your business out there. There are many other means of cheap yet proficient means of advertising. Find out which is more effective and peculiar to your environment.
3. Study and Monitor the Cash Flow:
Most often than not, you will find that as your business grows you may not require all the services you had subscribed to when you had started the business. Sometimes new and cheaper ways of getting that same task or service effectively done emerge, or why pay a full-time accountant when you can hire one to work part-time? You would save your business a lot of money if you observe this in time and stop the subscription or make the switch. Cutting down the cost of running your business increases the amount of your savings, hence increased profitability.
However, it must be noted that this should not encourage patronizing substandard service providers just because it's cheaper, or end a subscription that is essential to running your business because you want to save cost. Any of these actions will be detrimental to the growth and survival of your business.
To maximize your profit, be sure you aren’t spending a product or service you no longer need and subscribe to plans that still provide optimum satisfaction at better prices.
4. Be Flexible
Every idea and trend have its time. They come and go, and this means business owners have to learn to move with the tide. Swimming against the tides as a newbie will not only cost more and reduce profit; it can also collapse your business instantly. Been flexible saves a lot of costs and encourages profitability. With changing ideas and trends that come around for some time and then give way to newer ideas and trends, been inflexible will mean your entire business, though new in the market, will go obsolete. This will make you lose your customers and drop profits significantly.
This said start-up owners should be warned against been so flexible they lose their form and destroy the reputation of their brand. Your business has to have a form, a brand, and this must be guided jealous. To maximize profit, then owners of start-ups need to find and understand the line of difference between been flexible and protecting their brand.
This is a delicate part of your business. What makes aspect quite delicate is the fact that it wields a strong influence over your potential customers. If you tip up the price of your products or services profits will be increased, but this can make you lose your customers. However, if this is handled professionally, it will efficiently boost profitability.
Most new businesses begin with low prices so they can enter the market with ease. As time goes on it is expected that the business should have made significant development and growth and it may be time to review the selling price. Study the demand of your market, if there is a high demand for your products or services, then you may safely increase the price. The increase should not be extravagant else you risk losing your customers as they may begin to search for cheaper alternatives, but a slight increase in you're the price will greatly increase the gross profit with negligible market resistance.
6. Improve the Quality of your Products and Services
Only a few business owners still go back to the drawing room to improve the quality of their products and services after their business is launched. Most get too engrossed in the daunting task of running their new business that they fail to look into ways of offering their customers better quality services; this does not help profitably. If you desire better profit yield, then you've got to think, plan, develop, and execute new strategies that are smart and productive. When the market observes that there are improvements in the quality of service you offer the chances are good that you win more customers, more profits.
If you’ve got a creative crew, finding newer ways of doing this won’t be much of hustle. You will discover new and exciting strategies when you listen and learn from them. Your employees come in contact with your customers quite often and will know a lot on how to satisfy them better. A sound customer service unit will also provide an excellent means of getting feedbacks from your customers. Working on these feedbacks will go a long way to improve the quality of your overall service and ensure better customer satisfaction. Customers are satisfied, more customers are won, more cash flows in, and everyone is happy.
7. Use bait
Sometimes you’ve just got to use baits to them and their money. Over the years this has proven to hold a good sway over customers and where they choose to put their money. Market strategies like promotions, price discounts, referral bonuses, etc. can get the job done efficiently and send the profits flowing in in no time. However, before advertising baits like these, do consult with your financial advisers to learn how to manage this move to advert incurring loses than profits. It is also imperative to make a careful study of your market and environment to know which of these offers will be the best for winning more customers.