Unless you’re a company like UBER, Dropbox, Peloton, or Pinterest (among others…), as a small business owner, you likely aren’t looking to keep reinvesting all your business’s revenue back into the business, and you likely aren't counting on investors to hold down the fort until you make a profit…
You need that profit to grow in your business - and to fund the life you want!
Today’s Marketing Minute is for any small business owner, entrepreneur, or anyone who wants to start a business. Keep reading to consider the biggest tips I’ve found, from my own experience and from others in various industries about HOW to maximize profit in your business.
Let’s dive in…
First, How Do You Determine Profitability and Why?
It might seem self-explanatory, but it’s worth taking 45 seconds to remember. Profitability is what will help your small business grow. You obviously want to be in the GREEN, not the RED, otherwise, your business will soon go under. (Unless you have investors who can float you until you start making a profit of course.)
A profit is everything left from all business revenue after you’ve paid business expenses.
With that profit, you can decide how much to pay yourself, and how much you want to reinvest into your business. You need that profit in order to plan and grow - and stay in business! Learning about various methods for increasing profitability can help you implement specific strategies to increase revenue and decrease expenses.
These four tips will help you eliminate waste, redundant processes, and add more value to your business...
Profitability Tip #1: Evaluate Expenses
First, let’s understand the difference between investments and expenses. Depending on how liberal I want to be with my words, there can be some overlap. Expenses are the things your business must pay to keep things running. Your overhead. Your payroll. The marketing services you pay for to keep new business coming in.
Although that last one may also be an investment. If you're paying for something that pays for itself and more because it’s giving you a return - let’s call it an investment. I want to evaluate my expenses in order to decrease costs and increase investments.
Expenses can also be how you use your time, not just money.
That leads us to tip #2…
Profitability Tip #2: Work Within Your Primary Competency
Most business owners and entrepreneurs start their business because they have an idea, they’re an expert in a specific area, they’re passionate about serving a particular group of people, and/or they want more control over their time and financial future.
Too many find that they soon lose profitability because they are bottlenecked in trying to do everything that needs to be done in a business themselves. They are now marketers, customer service, sales, strategists, accountants, and everything in between. When you work within your primary competency…
Meaning that you identify what you’re good at, and if you potentially increase your competency in certain areas, especially those of communications, sales, leadership, and strategy, and you maintain your tasks primarily in those areas, and decrease your tasks in others, you can decrease waste and expenses.
You want to find ways to reduce your learning curve as much as possible. The truth is, there is never enough time in the day to be an expert at everything. However, you can shortcut things by learning from those who’ve been-there-done-that already or get help in those areas you’re not an expert in.
Learn from those who’ve created and done what you want to do.
This makes it possible for you to open up mental bandwidth, as well as bandwidth on your calendar, allowing you to focus more on what you’re good at and reducing bottlenecks in the business because you have to take the time to learn the repose in certain areas and or because you only have 24 hours in a day and can’t get to everything!
Profitability Tip #3: Eliminate nonessential processes
Another way to decrease waste, you want to look for nonessential processes. Many times we get used to doing something just because that’s the way it’s always been done, but it’s always a good idea to reflect on how you do things and if it’s the most effective way.
One example of a nonessential process could be a meeting that’s redundant. I’ve been in meetings where I discussed one topic with a person… only to discuss the exact same thing the next day with the next person. Not needed! Another example could be the way you document your sales touchpoints. Or rewriting an email from scratch every time, when you could potentially create a “boilerplate” template and just update it as needed.
If it could be as simple as taking the time twice to make a to-do list, maybe you made one yesterday… and feel the need to do it again this morning. (That’s probably just a case of procrastination if you look at it carefully).
Could be sending a person a memo and having three people remind them of it (remember Office Space?).
The point is, look at how you do things and identify where there are points that bottleneck productivity, or any movement forward.
Profitability Tip #3: Increase Channels of Revenue
Depending on where you are in your business growth, you may or may not have confronted this one already. Most start out with an idea for a specific product or service.
That’s one channel of revenue. Once you have systems in place that support it, from lead generation, to onboarding, to fulfillment, to retention, you can focus on expanding with another channel of revenue.
For example, say you offer consulting services for IT companies. That’s one channel of revenue. You could add to that and write a book. You could add another service, like a marketing service. You could partner with another company that complements your offerings and get an affiliate commission.
There are many ways to do this. It might take some creativity, but it’s worth diversifying your revenue streams so you’re not so heavily dependent on just one stream.
During the pandemic, I saw many examples of this… businesses had to quickly pivot and explore other ways of offering value. An easy example is restaurants… how can you stay open when people can’t come to you?
Curbside pickup, delivery, partnering with organizations to provide food, shipping groceries even. They had to be creative in order to keep business coming in.
In terms of profitability, increasing your channels of revenue can increase profits if you can find a way to add another channel while limiting expenses. This leads to the next tip, and our preferred way to add more revenue channels without adding to the workload - automation.
Profitability Tip #4: Leverage Automation and Time-Saving Tools
Take all of these tips seriously, but really take a look at this one. Utilizing automation wherever you can will free up processes, bottlenecks, mental bandwidth, and TIME.
For example, in my last Marketing Minute, I mentioned how I’ve identified an opportunity in the market and created a business model that provides high value for the client but only takes you 20 minutes to fulfill the service.
Finding another revenue source that won’t take much time will increase your profitability because you can increase your bottom line without increasing expenses (remember, we’re including how you use your time, and/or your team’s time as an expense).
The IT consultant above could offer marketing services that can be fulfilled almost entirely using automation. This won’t detract from their primary service and will increase profitability.
If you’d like to learn more about this marketing model and how you can offer it to your clients as an additional revenue source without taking up much time, see below.
Starting a business is one thing. Being able to increase profitability so that you can grow is quite another. Consider these tips as you progress and make a plan to put them into action. What can you do today to increase profitability in your business?
If you’d like to learn more about what I’ve identified as the best opportunity right now to start a business, or to add another service offering to a current business as a way to increase your profitability...
And if you’d like to learn how to use the right tools that will help you bring in a revenue stream of 6 figures or more in a year…
In only 20 minutes day -
Click here to register for my upcoming training, based on what’s working now:
“The 20 Minute Marketing Agency: How To Start A 6-Figure Marketing Agency in Just 20 Minutes”
- How YOU can become a Certified Marketing Consultant and enjoy a 6-figure income in the next few months.
- The simple 3-step process that allowed one of our clients to get 24 high-value sales calls booked in her calendar in just 24 hours.
- How you can earn a 6-figure income in just 20 minutes of work each day.
- The simple prospecting process that our client Mike used to double his revenue in one year (and every year after that).
- Finally -> How today you have a once-in-a-lifetime opportunity to catapult yourself towards financial freedom…
This is a training for anyone looking to either start a brand new business, anyone who wants to add another revenue stream to a current business, or any business who needs a systemized way to get more clients, practically on autopilot.
In my business, I’ve had success with this and thoroughly tested and refined this model. I’ve also helped implement and taught this model to numerous students who’ve built businesses of their own and/or who’ve successfully added it as another source of revenue for their business!
Want to be a good friend?
Help us spread the word and share a positive message by sharing this content with them. Just click the share button. Thanks!