Will My Small Business Make a Profit This Year? By Lexie Lu
You can’t tell right away, but you’re still dying to know — will your small business make a profit this year? Indeed, you could sit down and start tabulating the numbers to see if you’re on track to bring in more cash than you spend. You could also look for other indicators, ones that tend to show you’re on track to rake in a profit.
Start with these six methods. They will give you a clearer picture of where your business is and where it’s heading.
1. Has Your Network Grown?
A business can’t grow without customers. As your network widens, you have more people to sell or pitch to — and it’s simpler to do so when the person on the other end is someone you know. That mutual trust will help you to boost your customer count and, therefore, your company’s profitability.
With a bigger network around you, your business can profit from word-of-mouth marketing, too. Your connections will tell others about you. When those people reach out to strike up a deal, you’ll add more to your bottom line. That’s why the expanding size of your network can be one piece of proof that your business will survive this year and beyond.
2. Have You Boosted Prices?
Even a small increase in prices can translate to a huge bump-up in your bottom line. Chances are, you set your rates at the start of your small business’s trajectory. Now, you may have improved the value or demand for your items on offer. The price should reflect this. Nevertheless, some small-business owners fail to change their pricing as soon as they should — or they opt for nominal increases over time. Re-evaluate the pricing system you have in place to see if you can make smart increases.
3. Do You Advertise Well?
This one can go hand-in-hand with price increases. Sometimes, to warrant such a boost, businesses will increase their advertising expenditure. Greater visibility allows you to increase the amount customers are willing to pay for your products or services. The right marketing scheme can also spike demand, which also raises profits and prices if you want it to.
Take a good look at your advertising plan to see if you can change it in a way that will increase exposure to your brand and offerings. For instance, if your business depends on walk-in or drive-by customers, invest in materials that will get them in your door. You can purchase a handful of advertising flags in different shapes to catch their attention and bring them inside.
4. Are You Keeping Your Best Workers Busy?
So much of sales success comes down to the person behind the task. You know who your best salespeople are. What are they doing? How much work do they get each day? You should be well aware of such information — their hard work equals profit for your business. Feeding them the best contracts should equate to higher profits, so divvy up the work this way.
Some might fear that such a tactic would turn lower-tier salespeople against one another, but typically it serves as a driving force for all of them. Those tasked with the bigger accounts strive to keep them, while the rest of your sales staff will work harder to make their way to the top. At the same time, your small business boosts its profits. Win, win, win.
5. Have You Edited Your Expenses?
We’re not here to crunch numbers but, if we wanted to, you’d determine profitability this way — subtract your expenses from your overall revenue. Therefore, without doing a bunch of calculations, you can increase the chances that you’ll have a profit this year by cutting your total expenses.
Reducing your overhead doesn’t have to be a tough choice. Just look critically at your overall spending and see where you can make reductions or complete removals. Expenses that serve neither your business nor your customer can be the first to go. Every little bit helps, too — in time, you will see your profits increase as your spending goes down.
6. How Big Is Your Administrative Staff?
You can increase profitability by finding the right amount of people to helm the administrative department. In some companies, you’ll only need one person in charge of everything. As the business grows, though, you’ll need to add more staffers. Just make sure you wait until it’s clear that more help is required. Even as other departments boom and add more team members rapidly, you can add administrative staffers more slowly. This can save you money and boost your profits down the line.
Make the Money You Want
Now that you have some indicators of future profits, you know what to look for this year and beyond. Hopefully, what you uncover is a path to profits, which is what every small business wants. Think wisely and critically, and you’ll be in the black by year’s end.
Lexie is a UX content strategist and web designer. She enjoys copious amounts of coffee (with a dash of milk) and walking her golden doodle. Subscribe to her design blog, Design Roast, and follow her on Twitter @lexieludesigner.
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