Being in the accounts receivable industry, we interact with customers all the time, often personally over a cup of a coffee. Nearly all small businesses are constantly looking for ways to increase profits quickly, without increasing costs or by taking drastic measures.
Here are the ten simple changes you can incorporate easily to increase sales, cut costs, increase profits and recover your own money.
1. Handle Account Receivables Efficiently:
- This is the money which should have already come to you. Having a proper plan to address past-due accounts will immediately improve your cash flow and profitability.
- Most businesses do not have their own sufficiently trained staff and tools to recover money, and it is a lot cheaper to transfer accounts to a reputable third-party Collection Agency.
- Nearly all our small business clients are pleasantly surprised how much of a difference it makes when this unexpected cash is infused from accounts which they had virtually written off from their books. Some clients were just a bit non-serious about transferring accounts to a Collections Agency after 60-90 days of non-payment. Click here to find the cost of hiring a collections agency.
- Charging a late fee is a great way to encourage clients to make payments on time.
2. Cost Cutting:
- Cost-cutting does not always mean laying off people.
- If your small business is experiencing a temporary slowdown or you need extra cash to be infused to improve your profits, then do a deep review if you are overspending on the services subscribed. May be you can you downgrade that service plan by one notch and work nearly the same way.
- You have possibly leased out too much office space.
- May be you can turn off that air-conditioner of the conference room which is hardly used.
- Those magazines, industry publications or that cable TV connection can be canceled which no one uses.
- May be the frequency of your cleaning crew can be reduced by half.
- Have you been taking advantages of all the tax breaks that you can qualify for. Asset depreciation is a big tax break which many businesses overlook.
- A careful assessment of maintenance contracts or warranties that you have subscribed.
3. Increase your rates:
- Have the cost of your raw materiel increased recently, yet you have been absorbing those costs without passing on to your customers?
- May be you are undercharging compared to your competitors in your geographic area.
- If you genuinely explain customers the underlying reason for your own increase in operational costs, most of them would be willing to accommodate a 2% to 10% increase, and will likely not threaten to leave you.
4. Are you being overcharged?
- Can you get the same raw materiel from a different supplier for a lower rate or online?
- Reduce the logistics cost by selecting someone nearby.
- Or may be you can re-negotiate with your existing supplier to lower his costs giving references of other suppliers you just researched.
5. Bigger and repeat orders:
- Is your sales team concentrating only to bring in new business and forgetting about reorders from existing clients?
- Yes, clients often forget to reorder them-self until someone reminds them.
- May be their own business has been doing quite well and can easily place a larger order than last time.
- Why don’t you reach out to your old customers who have stopped using your service a while back, offer them special promotions to re-board.
6. Using technology efficiently
- A very simple example is that fax machine which breaks down twice a year or requires servicing or ink refill. Ditch that and go with online fax services which charge as little as $5 per month for unlimited faxes.
- Paying for toll-free numbers from traditional land-line providers can be a rip-off. Newer providers like Grasshopper and Mightly Call are super cheap and provide tons of free add-ons, for which you might have been paying a premium price with your existing provider.
- May be your website hosting provider is too costly, prices of cloud hosting have dropped significantly in the last few years and new providers often transfer your website to their platform for free.
- Your IT costs could be unnecessarily high too.
- Even big businesses have started using WordPress for hosting their websites and online stores. WordPress is super-duper cheap to setup and run. It can be integrated with almost anything you can imagine and software/security upgrades are almost always free. Godaddy and Amazon Web Services are my personal recommendations.
7. Online advertisement for sales:
- Facebook Advertising and Google Adwords are excellent places to find new customers. To be honest, you do not need to hire anyone to do this for you, it is very easy. Watch a few online video’s and you will be good to go.
- Instead of hiring a new salesperson, you can get five times more sales leads by doing targeted advertising on these Google/Facebook platforms. Do not be fearful of trying these out, you can set monthly budgets, and these online platforms will never charge you beyond that. Start small and then increase budgets once you become more comfortable using them.
- Higher sales will drastically increase profits quickly for your small business with this one simple change.
8. Boost operational efficiency:
- Are those daily/weekly meetings really helping you?
- Can your receptionist or a clerk who is not being 100% utilized take care of some additional tasks.
- Is your inventory system automated? Labor-intensive tasks are more prone to mistakes.
- Are you using a cost-effective accounting software? In recent years, provides like Zoho have been offering the same services like the big guys but at half the price.
- Ask your employees how your office efficiency can be improved or unnecessary costs can be cut, give rewards ( like gift cards) for those brilliant ideas which you decide to adopt.
9. Offer long term plans:
- If a significant portion of your customers utilize your services only for a few months and leave, offer a discounted yearly plan if they pay upfront.
- You will get more money from the same client, and probably after one year, they will love your service so much that they will renew your service again.
10. Be Certified:
- Those accreditations, licenses, and certifications may be easy to get and may appear to carry no value. But they play a huge role in gaining the trust of potential clients who do not know you but believe in those certifications.
- Make strategic alliances with other companies so that your clients can get more services under one platform.