If you’re one of the 30 million + small business owners, profitability should be at the top of your priority list. An unprofitable business cannot operate without a constant inflow of cash from steady sources. If you find yourself continuously burning cash without a well-developed overarching strategy, it’s time to start planning.
Here are some things to consider when thinking about growing your business:
The pandemic has made things more difficult than usual, and with the overwhelming shift to digital, it’s important to assess your business and ensure first and foremost that you are optimizing your manual processes or “digitizing”. In most cases, you’ll find that the time you gain back, as well as the organizational efficiency, are well worth the “cost”.
The most obvious way to increase your bottom line is to cut expenses wherever possible. This could be inventory, location, technology, or staff-oriented. Profitability is measured by gross and net margins, especially net margins. Reducing expenses will increase your net margin as you will spend less on operations, increasing profits in the process.
Cutting expenses may include switching to a less expensive supplier, spending less on supplies or reducing staff or staff hours. Laying off staff members is one of the toughest parts of doing business, but it can be necessary. Alternatively, leveling with your employees and helping them grasp your vision is critical to ensure long term success, especially when times get tough.
The first step to truly understand your business’s operating expenses is to break down your line items. Oftentimes, it is not obvious where expenses can be reduced, therefore carefully analyzing each line item and identifying its purpose can show you exactly where your money is going, and how much each segment of your business is costing you.
Not every one of your products or services may be profitable, so individually analyzing each one can enable you to root out the ones responsible for the most losses.
For example, a restaurant owner may take a deep look at his menu and decide whether it may be a good decision to offer fewer options and capitalize on what sells the most, removing the least selling items. Alternatively, a professional services firm may focus their energy on their best performing services, and build out infrastructure accordingly.
If applicable, there are amazing Inventory and product management softwares that provide you an efficient way to keep track of what’s selling, and what is not. offers an excellent way to stay on top of which items are selling and which aren’t. The software makes it easy to keep products that sell well in stock while getting rid of products that don’t sell and merely take up shelf space in storage.
Assess your market and adapt your services
Post pandemic, the top trend in today’s business world is digital, digital, digital. In an increasingly virtual world, customer expectations and consumer behavior are changing. This massive shift in sentiment is driving businesses of all sizes to take a long hard look at their processes and figure out where digitization can take place. Not only will your customer’s be happier, but you will also be much more organized.
Before deciding to add or remove any services or products, it’s important to research the market before diving into any new product or service. One important question to ask when adding new products or services is what kind of margins they will offer. Higher-margin service oriented businesses offer significant profits with less overhead.
Additionally, it’s critical to look at your existing products and services, and add ones that compliment or are adjacent to what you already offer. Think of ways to increase your ticket size and attract more customers. This could be the digitization of an already existing service or product, or an entirely new one altogether.
Keeping our current public health situation in mind, it’s expected that people aren’t shopping at small businesses in person like they used to. Simultaneously however, local shops and businesses are the heartbeat of communities and the human experience. As the country opens back up and returns to “normal”, you want to position yourself for success!
If you feel that you are having some trouble attracting customers, consider publicly announcing your safety protocols on social media, highlighting the cleanliness of your establishment, and making it clear to your customers that their safety comes first. That being said, it may make sense to invest in affordable technologies to help make your in-store experience safer.
One simple strategy is to deploy a survey to your customers asking what type of products and services they want to see. There could be something new on the market that you haven’t been exposed to yet or a simple add-on to one of your existing products or services that makes all the difference!
Widen your distribution channels
Start with a simple question: Who are your customers?
If the answer isn’t clear and direct, social platforms like Instagram, Linkedin, Pinterest and Facebook can be of great service in helping you gather data and define your target audience. This isn’t exactly ‘new’ news to any small business that already utilizes social media, but those that have skipped out need to know that social media is now more important than ever!
The best part about social media, and content marketing in general, is that it is free to start (aside from sweat equity of course). Regardless of your product or service, it’s important to create content that resonates with your customer base. Whether it’s in the form of pictures, videos, contests, or blog posts.
Advertising is the most obvious marketing channel, and it can take the form of digital, TV and radio, and other print ads. Information marketing is another option. It includes publishing articles online, often targeting keywords that relate to the business.
Special offers are a way of garnering some business during these times. Maybe offer a discounted service or a lower level service that your business normally doesn’t do. During tragic times like this, there should be no pride when it comes to having lower-priced offers.
The basic foundation that drives economic growth is the notion that humans in this society have an inherent drive to spend, consume, and accumulate. The short-lived slow-down of in-person visits will not change this fact.
This is where the power of digital advertising comes in. Digital marketing is the form of social media brand building that can be extremely cost-effective when executed properly, in any environment!
In summary, there are many avenues one may take to grow their business, starting with governance and administrative improvements. However, at the base of every successful business, is a successful tax strategy!
Talk to one of our experts today to plan for the future!