As small business owners, we are constantly looking for ways to increase profits within our businesses. And I’m sure you’ve come to the realization that it’s not as easy as it sounds. In order to increase profits, you must increase revenue without increasing expenses (or at least not higher than revenue). For most business owners this can be quite the challenge. However, over the last 6 months or so I’ve been taking a deeper dive into my clients’ businesses and it turns out that there are multiple ways to achieve this goal. In fact, I have a list of 5 ways to quickly increase your business profits.
1) Lower Tax Liability
Of course, being the tax nerd that I am, I figured we should start here. As you know taxes are a HUGE expense for both entrepreneurs and employees. The only difference is, entrepreneurs can actually do something about it. Fully understanding the items that your business can write off can save you thousands! I recently had a client who bought a new car for her business and didn’t realize she could write off Bonus Depreciation. After informing her about this write-off, she was able to realize an immediate savings of $18,000!
Just like your personal finances you should run an expense audit on your business finances as well. What is an expense audit you ask? An expenses audit is when you go through you prior month or months expenses and ask yourself 2 questions
1) Do I still need this?
2) If yes, can I get this at a cheaper cost?
You’d be amazed at how powerful these two questions become as you go through your monthly expenses. After going through this exercise with a recent client we were able to eliminate over $400 worth of monthly expenses. That’s almost $5,000 per year of excess profits straight to his bottom line!
3) Review and Understand Your Numbers
Let’s face it, as business owners we spend our time wearing multiple hats; marketer, salesperson, operations manager, customer service rep, etc. The last thing that we want to do after a long day of work put on the CFO hat and review the numbers. Moreover, even if we did most of us wouldn’t know what the numbers were saying. This is largely why most small businesses go out of business within the first 5 years. Knowing this, I recently started guiding my clients on how to read their financials and how to make decisions off key indicators. This has empowered them as business owners and kept their business alive and thriving.
4) Explore Partnership Opportunities
Strategic Partnerships can be the catalyst for tremendous business growth. The best strategic partnerships are ones that create a three-way benefit; your business, the partner’s business, and the client. In order to find good partnership, you need to ask yourself, “What type of business can I add value to and vice versa?”. A great example of this is financial planners and accountants. The planner benefits by the accountant referring clients in need of financial planning, the accountant benefits by the planner referring clients in need of tax prep, and the client benefits by getting their taxes and financial plan completed by two professionals who are in sync. Partnering with my good colleague Jeff Badu has drastically improved my business and the value add to my clients.
Meet your customers where they are
This last tip is very simple but I seldom see it done by business owners. Marketing and generating leads is always or should always be a focal point of your business. But the major question that is often asked is, “Where can I find good leads to market to?”. The answer is to meet your clients where they are. For example, if your clients are doctors you should join a few medical chapters/organizations or go to a medical conference. The key is to find ways to get around your client base in a less formal way. People do business with individuals that like and trust so what better way to gain likability than meeting a client when their guard is down.
These 5 tips are just a few ways to increase the profits within your business quickly. The beauty of entrepreneurship is that we can immediately implement things that we learn. So I encourage you to implement a few of these strategies into your business now and please let me know your results!