Let’s talk about some more quick ways to increase profits. Full transcript below…
Welcome to the Business Numbers podcast. I’m your host, Ben McAdam. I’m a profits coach, virtual CFO, and entrepreneur, and I’ve created this podcast to help you grow your business profits and understand your business numbers without judgment and without burying you in a whole bunch of jargon that you don’t need. Just actionable tips and case studies to help you grow your business. For show notes, go to the website businessnumberspodcast.com.
In the last episode, I talked about a quick way to free up profits in your business and, hopefully, you took a few minutes to do that exercise and download the full instructions. The exercise works but you can’t keep doing it every day to find more profits. You do it maybe every one to three months, and it tends to train you to stop the leaking at an earlier point, so less and less you’ll have to do these reviews, and less and less the exercise of work. It’s kind of a good thing really that it’s not just a temporary fix, a band-aid on the leaky pipes. They actually fix the leak and make it leak a lot less on a more permanent basis.
But the good news is there are a lot of other ways to increase your profits, apart from that exercise. And here are another four.
First one is the concept of time equals money. You’ve heard that before, but let’s apply it to your business. If your team is wasting time, that obviously costs you money, but your time also costs money because you could do something else with your time to generate more money. For example, if you’re spending too much time checking your emails or checking the customer service emails, then that’s time that you’re not spending on increasing the revenue in your business. So free up wasted time and spend it wisely.
The next idea is raising your prices. And the reason why that increases your profit is because every extra dollar on your price is an extra dollar of profit because you’ve raised the price, but you haven’t increased the expenses. So every extra dollar you raise the price by is an extra dollar of profit multiplied by however many customers you raised the price for. This is pretty hard to convince most business owners to do, but I’ll do another episode where I explain how you can still be more profitable even if your customers leave because of your price rise. Not just if maybe people don’t like it, or maybe it might stop people from signing up, but if they actually flee your business because of a price rise, you can actually still be more profitable. Again, I’ll do that in a different episode.
Idea number three: sell more at once. So when someone buys from me, sell them more, cross-sells, upsells, bundles, all those kinds of terms are terms for selling more to a customer when they buy from you. So someone’s decided, oh, they want the widget, and then you sell them either the better version or the premium version of the widget, or you sell them the other widget that goes with it, or will sell them a bundle of widgets or you bundle them a bunch of services. All those are options that can increase the value of each customer which is obviously more profit, but it also means you’ve got more money than to reinvest in your marketing. And it’s a bit of a positive snowball.
And the final idea is: sell to them again. Recurring revenue is nice, but not always possible, and some people try to make it happen and that doesn’t go so well because the product or service has no recurring demand for it. So you just have lots of problems with churn, if you try and force recurring revenue.
But there’s other ways to sell to people. Again, apart from recurring revenue you can also connect with past customers and sell them either the same thing, an updated version or something completely different. So that’s four ideas: time equals money, raise prices, sell more at once and sell to them again. Any of these inspired some ideas for your own business? You can let me know in the comments or the contact form at businessnumberspodcast.com.
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