The Two Obvious Ways to Grow Your Profit That You're Forgetting
You've gone stagnant. Your sales are consistent, but so are your expenses, and you find yourself panicking over your financial goals. How can you get more money to come in?
Unless you've figured out how to clone yourself or stop time, there isn't a whole lot you can do in the way of working more hours, creating more product, or reaching more people without expanding your team and paying someone to do that work for you. Sometimes, outsourcing the work or adding Labor as one of your business costs just isn't going to cut it.
Today I'll be sharing a basic outlook on growing profits that will allow you to better understand your business finances and the ways in which you can grow your brand financially.
Let's consider someone with a New Year's Resolution to lose weight and become more healthy. There are essentially two (extremely simplified) ways to think about this: exercise more or eat less.
Now, we can obviously break those down into some more actionable tasks (burn more calories vs. take in less calories, etc.) and a good, healthy diet or eventual lifestyle consists of some combination of the two: maybe incorporating more simple exercises as part of your daily routine, like biking to work or taking the stairs more often, and swapping healthier, lower calorie foods for your usually junky snacks.
Think of your business as a part of you, just like your body. In order to have a "healthy" business, you need to have less expenses than income so that you can take home a profit, right?
It seems like right now, your business is just kind of average. Something to be proud of, but you know you could do better.
Thinking of your business in terms of the aforementioned New Year's Resolution, what are some goals you can make to increase your profit to have an even "healthier" business?
cut down expenses
Some expenses are necessary, but like junk food, a lot of expenses we're just justifying to ourselves. Take a look at your business budget (or if you don't have one, start keeping track of everything right now!) and see what things you're spending your income on.
Examples of things that are necessary are website and marketing fees and the cost of the materials to make your products.
Examples of fees that aren't necessary are business lunches and fancy pens.
Think of the things you can cut out for a while or for forever as part of your business "diet" to minimize your expenses. See if you can go a month without your Instagram scheduling tool and just taking some time at the beginning of the month to plan it all out for yourself. See if you can find some cheaper materials somewhere you hadn't bothered looking before.
Cutting back on expenses will magically open up new profits that weren't previously available to you before! It's up to you to decide whether you're getting a big fat bonus check with these extra profits or if your business will benefit financially from some reinvesting.
increase your prices
As a business owner, the more time you spend running things, the more experienced a professional you become. You've learned a ton since you first started, so it's not a far jump to understand that your time is more valuable.
Take a minute to evaluate whether your products or services are paying you what you're worth.
Instead of pricing emotionally, determine a new price for your products that reflects the real value of your goods, including the time to create them, the purchase of better quality materials, or your investment in education that allows you to produce more valuable products.
These are all normal reasons to raise your prices, and as long as you implement a strategy for this increase, you will see yourself sailing smoothly into higher profit margins.
When you start a workout plan, you usually start small and simple and grow into a fully-fledged gym rat over time. The same goes for price increases: start basic, by increasing a dollar or two, and as you see your sales remaining constant or even growing, you can begin planning your new pricing strategy and eventual growth.
Like every good healthy lifestyle, there is some combination of both eating right and moving your body to keep it strong. The same goes for your business.
Take a couple of minutes to evaluate some expenses that you can cut out right now and consider whether you're charging what your products are worth. The future of your business is in your hands!
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