There comes a time in any business when profits seem to be stagnating or even decreasing. Whether it is due to internal factors, external factors or both, the situation can leave a business owner pondering which steps to take.
On paper, increasing profit margins is simple.
You reduce costs, increase sales or raise prices. Of course, deciding which route to take is not so simple and even when you decide, you need to devise specific strategies to achieve your targets.
Increasing prices is usually an option of last resort since it can lead to reduced sales in a competitive industries with elastic demand.
This means you’re left with two options which can be achieved in multiple ways.
Here are some of the strategies you can use to boost your profits.
Reduce Costs Through Business Process Automation
Done well, business process automation can benefit everyone in the company. You can reduce spending and become more efficient while employees’ roles become more rationalized.
Workers can become overwhelmed and unmotivated by repetitive tasks like data entry. Automating these processes allows you to redeploy them to assignments that are more engaging and rewarding.
Automation also allows you to speed up invoice and payment processing. Spending less time on each accounts payable, debt collection, invoicing, bill payment or reimbursement can result in cost savings.
The savings may seem minimal at first but they add up over time. Eliminating or reducing manual accounts processing can, therefore, improve your project margins.
It should be noted that you can’t make the best decisions concerning your business if you don’t fully understand your financial situation.
However, it can be difficult to manually go through each invoice, collate data and analyze the figures. An automated system can do this quickly and give you the information you need to make forecasts and plan for the future.
Reduce Costs by Using Project Management Apps
Time is money. Project management apps can help reduce delays and mistakes which can be very costly in the long run.
Let’s consider a major construction project. When workers aren’t allocated to job sites in the right numbers, it can take much longer to get the work done.
The same applies when you need to redeploy workers from sites which are far away or you’re not even sure who is posted to which location.
Apps like FieldPulse allow you to schedule employees, monitor their locations and reach out to who are on nearby job sites. You can even plan out the routes they take so you can reduce travel times, fuel costs and even overtime payments.
Apps can help with internal and external communication, tracking the progress of tasks, managing procurement, sales and payments and much more.
Even using an app like Trello can help with assigning tasks and tracking workers’ progress. While you will need to invest in the technology, doing adequate research and taking advantage of trial periods helps you to determine whether a particular app is right for your operation.
Reduce Costs by Hiring Freelancers
It is anticipated that the majority of the US workforce will be freelancing by 2027. You don’t have to wait until then to rethink the conditions under which you hire workers.
Hiring freelancers, especially those who work remotely, gives you an opportunity to reduce several overheads and additional costs.
You don’t need to cover training, vacation pay, insurance or sick leave. Hiring workers only when you need them reduces your operating costs and boosts key performance indicators.
Analyze your operation and see where you could benefit from freelancers.
Common tasks which are outsourced are social media management, graphic design, web development and email handling. You may be able to hire someone abroad who is willing to work for less than workers at home.
Freelancer marketplaces like Upwork, PeoplePerHour, Fiverr and Get a Coder are excellent places to begin your search.
Increase Sales by Utilizing E-Commerce
B2B e-commerce has become quite sophisticated, and if your business is lagging, it could lose business.
Even in a digital environment, B2B commerce is about relationships and not just conducting a transaction. You therefore need to go beyond just providing a shopping cart.
If your catalogs are large and there is lots of room for product customization and custom pricing, it is important that buyers find it is easy to get the information they need.
You should provide as much basic information as possible online so when buyers contact your workers, they’re ready to make orders. You shouldn’t have employees repeatedly answering simple questions about product sizes or what a particular service includes.
If you’re the middleman, ensure you also provide adequate information from your supplier.
You can also reel in new clients by offering free or low-cost samples of your offering.
Current clients should be able to opt in for add-ons, access digital downloads or renew their contracts online. It is important that you take full advantage of e-commerce platforms.
Increase Sales by Using the Right Digital Channels
B2B businesses need to be especially targeted in their advertising and marketing efforts.
However, varying individuals probably have to sign off before another company spends money with you.
You need to get your business in front of these people. While social media is great from B2C lead generation, email marketing may be better in your line of business.
Maybe you need to focus on face-to-face networking, trade shows and industry events to meet key buyers. Track each of these methods to determine which are most successful for your business.
Increasing profit margins is difficult but it is definitely not impossible. The best approaches typically involve a combination of increasing sales and cutting costs.
Precisely how you go about either of these tasks depends on the unique circumstances of your operation. Do your research that give some of these proven strategies a try.
Top ways to increase business profits:
- Reduce Costs Through Business Process Automation
- Reduce Costs by Using Project Management Apps
- Reduce Costs by Hiring Freelancers
- Increase Sales by Utilizing E-Commerce
- Increase Sales by Using the Right Digital Channels
About the Author: Marie Erhart is a Success Manager at FieldPulse, creators of field service software that lets you run your entire contracting business from a single app. She works with contractors to help them grow their business using best practices.