It is a well-known fact that profitability is the lifeline of any business existence. Profits are crucial for a business to carry out its activities and grow in due course. However, due to unanticipated situations, your business would need to boost profits instantly. For example, the minimum wage hike in the province of Alberta would affect small and medium business operations. Big businesses have reserves and surplus account when they need immediate money. However, small and medium businesses do not have this cushion due to limited profitability in the initial stages of company formation.
Businesses need to increase profits immediately due to some of the following conditions:
Hike in minimum wages
To purchase new technology
Ban enforced on a profitable product (due to legal, health or environmental issues)
Launch of new product
Recurring losses in the past few years
Apart from these points, there are multiple factors wherein your business has to increase profits. Here are some ways your business can boost profits.
You can conduct marketing activities in a number of ways in order to increase sales. The use of traditional means of advertising such as billboards, banners and standees are some of the cost effective methods. This is suitable especially in the case of small and medium businesses where there are budget constraints for advertising. If you have sufficient capital available, then the use of video, radios, newspapers, magazines are a good option to cater to a larger portion of the target audience. The use of sales promotion techniques is a better way to increase the sales immediately. Furthermore, with the help of free sample or discounts you entice the customer to buy the product. Thus, you induce a trial to use the product. If the customer likes your product, then he would purchase it regularly in the future. This increases the sales of your company.
Today, with the use of digital marketing, a business can reach out to their customers in a better manner. The use of digital AdWords, SEO, Social Media marketing and other platforms helps businesses to communicate effectively at low costs. Moreover, it helps businesses to have a better reach and the effectiveness of the campaign can be effectively measured as well.
Although this is a common suggestion one would get in order to increase profits, but it is not easy to do so. Reducing costs increases your sales. Businesses should be careful that they do not compromise on important elements while reducing costs. A better approach to reduce costs would be to control the rising costs. This is possible when the number of wastages is reduced.
At the same time, if the particular activity or process is expensive, then you should consider outsourcing it. It is better to outsource the process to a business organization that is able to do the same process at low cost and in less time. However, care should be taken that the quality is not affected. Moreover, never outsource the core business activity to other businesses.
Another way to increase your sales and profits is to enter into new markets. There comes a time when as the business begins to grow, the market becomes limited or saturated. In such situations, sales become stagnant or the profits grow at a reducing pace. Therefore, to earn profits immediately at a faster pace, entering new markets is a good option. While entering newer markets will bring in additional expenses, it is useful in the long run. Your business will grow rapidly, thus, providing you with additional profits when needed.
If it is difficult to set up your business in a new location, you can use distribution channels to reach your products in new markets. You can carry out the following distribution methods.
Intensive Distribution- products are distributed to every possible retail outlet. Examples include Coke, Pepsi.
Exclusive Distribution- products are distributed solely through exclusive company outlets. Examples include Nike, Rolls Royce.
Selective Distribution- products are distributed through selective retail outlets alone. Examples include designer ware.
New Uses of Product
In order to increase sales, your business can come up with new uses of the existing products. Sometimes, it may not be feasible for a small business to expand to newer markets. This is when you can increase the consumption of the same product and get more from the current customers. It is a good strategy for increasing growth in existing markets. This also involves less risk as the product utilizes the same resources and capabilities for existing use.
A business can also increase its sales by increasing the usage of its existing products. An example of this can be a toothpaste manufacturer. A toothpaste manufacturer can introduce the same product by increasing its usage by asking its customers to use the product twice for better results. In this way, the company is increasing the consumption of its product by the existing customers.
Use of Latest Technology
The use of latest technology helps to reduce errors, saves time and improves the quality of the products. This results in increasing the overall productivity. When the productivity increases, profits also increase. Furthermore, the customer service is changing with technology. A business using technology has a better customer service which is necessary to retain the existing customers. With the use of automation, you are able to produce more in less time. The more you sell, the more is the profit generated. Thus, the efficiency of business also improves. The use of technology also makes the work easier than before.
Up-selling and Cross-selling
Your business can up-sell or cross-sell its products to the existing customers to increase the sales. In up-selling you introduce products that are a higher version or an upgraded version of the existing product that your customer is using currently. An example of this would be trying to sell a car to a customer who is using your two-wheeler for the past few years. Another example would be when you pitch a new and an expensive model of your company mobile to its existing customer base.
In cross-selling, the business sells a different product or service to the existing customer. An example of cross-selling would be when a two-wheeler company sells helmets and other bike accessories to its customers. Thus, up-selling and cross-selling is a method to increase the sales of other related or unrelated company products. As a result, the revenue of the company increases.
These were some of the ways your company can use to increase the profits immediately when needed. Furthermore, diversifying into new industry, new product development, and modification of the existing products to boosts sales are also used by companies. Apart from increasing sales, you can raise funds from investments, loans from financial institutions, better management of inventory control, increasing the cash flows and effective tax management to increase profits. Before you use any of the above-mentioned points conduct a thorough analysis of the market conditions to execute these strategies properly to boost profits. For more information on how to boost profits and analyze the market environment, get in touch with a resource center in Edmonton.