When you’ve launched a small business, profit margins can be razor thin as you get it off the ground. In fact, about 50% of all new startups close within five years due to a lack of revenue. When you’re running a new business, cash is king, and increasing your income is essential to your survival.
While most businesses think about income in terms of sales or new clients, there are many different ways your startup can increase your profits, starting with reducing your operating expenses. From office software to equipment maintenance, managing a small business can be prohibitively expensive and can prevent you from making any money. By being strategic and reevaluating how you handle your daily processes and operations, you can identify areas to change how you do business and become more cost-efficient.
Increasing your profits involves changing your approach both in how you work personally and how you handle customers. Here are five simple ways to earn new revenue and cut costs with your company:
- Go Paperless: If your company still does a lot of business on paper, you are likely spending a fortune on copy reams, ink, toner and printer maintenance. Reducing your business’ use of paper is good for your bottom line and for the environment, improving your company’s carbon footprint. Even just cutting down on using physical notepads for client notes and ideas can save you money; instead switch to services like Google Docs, where you can record your notes electronically for free. While you may not be able to eliminate paper completely, even making small changes—such as switching to online contracts and waivers—can cut down your expenses.
- Switch to Mobile Invoicing and Contracts: Similarly, if you’re still using hard copy contracts, creating and sending your own rudimentary invoices or handling written credit card information, you may be costing yourself money. By using an app like PocketSuite, you can create and send professional-looking invoices directly to clients with just your smartphone, accept payments from customers, automatically charge sales tax, manage contracts and even schedule appointments. This platform can significantly cut down on the amount of time and business management software you need, as its powerful enough to handle several different areas of your business.
- Bundle Products: If you offer a suite of products or services that complement one another, bundling your products can be a great way to move more items and make more money. For example, if you are a web-design company who also has copywriting services, offering a bundle with a new webpage and landing page copy can be a great way to make more sales and earn a premium. Offering a select package of services makes customers feel like they are getting more of a deal and they are more likely to make a purchase.
- Hire Help: While it may sound counter-productive, hiring help can actually be an excellent way to increase your income. As a small business owner, you’re pulled in a dozen different directions and act as sales person, bookkeeper, product developer and marketer. With so many demands on your time, it’s impossible to focus on the big tasks that result in more income, such as meeting with prospective clients. Virtual assistance companies like eaHelp offer skilled help at a small hourly rate to use as needed. You can have them take over routine tasks like scheduling, managing social media accounts or handling expense reports so you can focus your precious time on building the business.
- Offer Referral Discounts: If you have clients who use your services and are satisfied with your work, they are a prime audience to help you increase your business. While print advertising, online marketing and promoted social media posts are all great ways to get your business known, nothing can beat the power of word-of-mouth advertising and a strong recommendation. Let current customers know that if they refer other customers to you, they will get a referral bonus, such as a discount on a future order or a free expert consultation. This can be an easy and cost-effective way to get new customers based on the reputation and recommendation of your current clients.
Launching a small business is difficult, and it can feel like it’s taking forever before you can pay yourself a decent salary. In addition, you may have to put your own money on the line when applying for small business loans. Managing a startup is financially and economically challenging and requires real creativity and dedication to make it a success. However, creating a new business does not mean you are stuck dealing with minuscule income and high expenses. It is possible to cut your costs and increase your profits without taking drastic measures. These five tips can help you reduce your costs, increase your profits and free up time so you can focus on business development.