By Michelle van Schouwen
Many small business owners say 2017 is starting out well from an economic perspective. Still, the need to build and sustain higher profits remains near the top of this year’s list of concerns.
Wasp Barcode Technologies’ new State of Small Business Report shows that, for companies with anywhere from five to 100+ employees, building profit remains among the the major key challenges. For companies with five to ten staffers, a full half of respondents name it as their top concern (with the related issues of “growing revenue” and “cash flow” not far behind).
Profits can be influenced both by raising the top line (revenues) and reducing expenses.
Let’s focus on the top line for the moment. While cost cutting is important to maximizing profits, you probably can’t simply cut your way into greatness.
To increase revenues and improve the top line, companies can explore several avenues:
-Protecting the base: Improving customer experience and retention (social analytics platform SumAll estimates that businesses with “40% repeat customers generated nearly 50% more revenue than similar businesses with only 10% repeat customers”)
-Cross-selling to the base: Identifying and marketing additional services or products that current customers should be getting from the company
-Growing the base: Identifying, nurturing and capturing “more customers like these” – in other words, finding additional customers similar to the ones that already patronize the company
-Expanding to new types of customers: Employing either or both the “good, better, best” model of selling up and down the quality/price scale, and/or creating new, original offerings that will attract a new breed of customers
-Diversification: Creating a whole new line of business that promises to yield strong returns
Whatever the direction, start with well-thought-out strategic planning and follow through with intelligent marketing and consistent sales. Every small business must recognize the importance of rigorous planning and testing of its profit-building hypotheses and of a sharp focus on the realities of business in an ever-more-competitive marketplace. (You’re not wrong – it’s always tough out there!)
If making great profits was easy, everyone would be doing it. Taking the right actions this year helps assure your company enjoys the financial rewards of your efforts.
Michelle van Schouwen is president of van Schouwen Associates, LLC (vSA), a B2B marketing company based in Longmeadow, MA. vSA is known for vSALaunch, its proprietary, modular and scalable system for B2B marketing launches, vSAConsult, its executive-level strategic planning capability, and for its expertise in integrated marketing for B2B.