As the holidays have wrapped up—and the general whirlwind of time management woes and budget concerns known as “running a small business” are bearing down on a daily basis—we’ve noticed a recent surge in the number of clients seeking cost-effective ways to increase profit margins without leaving even fewer precious hours for eating, sleeping (as if), and spending time with loved ones.
Luckily for them, we’ve rounded up a collection of tips to help alleviate the stress and struggle normally associated with business success. What you may notice is that many of these suggestions have nothing to do with competing, and everything to do with getting creative about both finances and value innovation. The Harvard Business Review actually has a great article on value innovation that everyone should check out. In the meantime, however, those of you who aren’t familiar with the phrase need only know that value innovation is all about stepping outside the theoretical constraints of your industry to consider what choices best serve the wants and needs of your average customer. By doing so, you create a new perspective from which to launch the forward motion of your company while possibly carving out an entirely new niche in the market.
1. Value Innovation
This mindset can (and should) apply to all aspects of running a business. Take budgeting, for example: The guys from Monty Python were so restricted by their production budget during the shoot of The Holy Grail that they couldn’t even afford horses. In stark contrast, their “competition,” Blazing Saddles, had no issues when it came to production value—horses abound! By embracing the constraint, however, and considering what the public really wanted from their brand (laughs!) rather than worrying about what the other guy was doing, they turned a seemingly crippling situation into a chance to get creative. Hence, King Arthur skipping through the countryside on foot with his faithful man-servant banging two coconut halves together in his wake (arguably the funniest and most notorious gag in cinema history).
This is how modern businesses need to start thinking: outside of the box. For anyone interested in a great read that dives deeper into this topic, The Last Word on Power, by Tracy Goss is definitely a book worth picking up. For now, though, let’s get into the nitty-gritty of cutting your bottom line and driving your profits without putting a dent in your personal time bank:
2. The Bottom Line
Controlling expenses – It probably goes without saying that expenditure is the number one concern for most businesses, regardless of size. The trick here, however, is to make sure that you’re cutting expenses that don’t affect your bottom line (e.g.: mailing materials, business cards, etc.). Can you cut back on overextravagant bonuses? Could you make it a habit to purchase office décor and furnishings from a wholesaler instead of Restoration Hardware? If you run through your monthly spending with a fine-tooth comb, you’re sure to find at least one example of unnecessary cost.
As the people most intimately familiar with purchasing and inventory, your employees are a great tool in finding cost-cutting solutions as well. Ask for creative ways to cut back, and provide recognition or compensation for their efforts—you might be surprised with what they think up, and it won’t cost you a moment of your own time or mental energy.
Save on travel – Most entrepreneurs spend a good amount of time in the air or on the road. Will a club card help you save on gas? Can you set up airfare alerts (try AirfareWatchdog.com) that let you know when travel is less expensive to common destinations? Have you considered discount accommodations through platforms like AirBnB.com or HotelTonight.com? There are about fifty ways to curb expenditure when it comes to travel, including being flexible about your travel dates, and you could be seeing a huge total savings by the end of your first fiscal year with very minimal effort.
Curb marketing costs – This is the age of social media, and that fact should certainly be giving small business owners something to smile about on a daily basis. While this method of marketing can be time-consuming—many companies have one or more employees devoted solely to social media marketing—it is usually FREE and goes a long way to boosting your visibility and, depending on your ad strategy, street cred.
3. Driving Profits
Use your existing customers – Believe it or not, your current customers are the best possible resource for spreading the word about your company and creating trust, value, and demand around your products. Virtually effortless ways of taking advantage of customer loyalty are: 1) create pop-ups for online purchases that prompt customers to provide a given number of contacts for a discount on their next purchase; 2) reward customers in some way for “liking” your page or sharing their recent purchase on Facebook or Twitter; or 3) throw an end-of-year “customer appreciation” party where guests can invite friends to receive access to exclusive products or member discounts (this is especially helpful to “Main Street” vendors and the like).
Beside simply offering rewards to your customers, you also need to be aware of their ability to create a word-of-mouth following. Sure, a great product is easy to sell, but a great product combined with amazing customer service and a killer atmosphere is something that gets people talking—and that’s what you want. Make sure that your employees are trained to create relationships with regular customers and make an effort to create a store or showroom that people will want to return to again and again (i.e.: clean, stylish, and uncluttered).
Offer samples of your products – So, you’ve got one customer who comes in every week for the same block of cheese or the same specialty periodical. Try setting out small samples of other products you think she might enjoy for other occasions. Have you unexpectedly found yourself in an overstock of a product you could redistribute into sample portions? Include one with every purchase made over a weekend, and let people know you value their business and want to show your appreciation with a small gift (available for purchase year-round—wink).
Invest a portion of your profits back into your company – Sure, it may seem tempting to pocket every bit of profit you see at the end of the year, especially if it’s the first year you’ve been in the black . . . but reinvesting is literally one of the most crucial aspects of growing and maintaining a successful business venture. Your business is an investment, and it’s worth sacrificing that trip to Rome this year if it means you’ll jumpstart a surge in sales that will keep you flying to Europe first class every year of your life thereafter. Take a moment to ask yourself if there is any portion of that year-end cash that could be invested back into the company (or even stashed away toward a larger future project or improvement).
For more information on investing your time and money back into your business wisely, check out this article from Entrepreneur. Want help strategizing about business growth for your company in 2017? Contact us today!