When a business is in decline, it is important to review what goes wrong at the financial level.
Many times, people make the mistake of looking for flaws in services or employees who perform them, leaving aside the economic aspect, for example. The price of the services should be adequate, the income should be higher than the expenses, and the business accounting should be well executed. Not all business people pay attention to these details that have to be taken into account.
Thus, even small mistakes can lead to your company’s decline if you ignore them for a long time. The low profitability of your enterprise comes solely from the poor quality of the services and the lack of clarity about the income of the business.
Importance of financial control
Just as you ask your customers for feedback on the service received to find out the shortcomings or the points that need to be improved, it is essential to carry out a financial analysis of your business. If you have been working for some time and have many clients, but you notice that the return on investment is almost nil and the number of income is almost the same as the number of expenses, it means that on a financial level, you are doing something wrong.
Pay close attention to the following factors if you want your business to be more profitable.
1. Define your prices correctly
It seems like a very simple task, but in many cases, it can be tedious for novice entrepreneurs. The prices of your services can be defined by the average prices of neighboring businesses. However, remember to structure it according to the cost of the raw material, employees’ salary, and the time it takes to do a certain product, among other operational expenses.
Many times, it is better to sacrifice a high-profit margin to attract more customers and be more competitive in the market. Of course, without neglecting the quality of the products and the return on investment.
2. Work on attracting and retaining clients
Without a doubt, selling is key to staying afloat in the market. There is no money without sales, and without money, you are one step away from bankruptcy. Working on attracting and retaining customers implies implementing memorable customer service, a marketing strategy that allows you to reach more clients, and a loyalty plan that rewards your most recurring consumers.
3. Make your accounting clear and structured
If you keep your business accounting structured, you can identify the economic status of your business, how much money you have, how much you can invest, and if the number of sales (income) is sufficient to sustain the company. Maintaining your accounting process structured is a key factor that should be implemented on time. It can prevent your enterprise from going bankrupt.
4. Modernize your systems
Use technology that allows you to be more efficient in your management and relationship with your clients. You should purchase management software that allows you to eliminate long waiting lines, problems with service reservations, inconveniences with daily and monthly cash closing, etc.
5. Diversify your portfolio
A service portfolio is a tool that allows you to publicize the services that you are offering. Usually, this portfolio is determined at the time you create your company and showcase the services you are going to offer. It is necessary to review the portfolio and, if necessary, redefine it according to new market changes and trends.
6. Offer value-added services
To make your business more profitable, you should identify if what you are selling is just another product on the market or if you are providing people with a unique and memorable experience.
Thinking about your clients’ needs will allow you to know what they want to buy and work towards it. When you identify and know what your customers want, you can turn this information into an opportunity for your business to provide added value through the offer of its services.
7. Break paradigms
The majority of entrepreneurs and professionals with little experience in managing their businesses are afraid of change and making decisions that put their money or the stability of their businesses at stake. However, there are certain risks that you should take to get your company out of its comfort zone and position itself in the market.
Take risks with new things. If you cannot decide between buying a machine or continuing with the same equipment, between implementing a course or waiting, between investing in digital marketing or settling for current customers, or any other decision that involves investment and therefore causes you to fear, evaluate and put the pros and cons of that investment on a scale. If there are more pros than cons, take a risk and do everything possible to make an opportunity work.
8. Make use of marketing
Take advantage of marketing to publicize your business. Marketing is defined as a series of activities to identify the needs of your public to satisfy them most appropriately, thus providing a benefit to both yourself and your clients. It is also a key concept that you should apply if you know you need to reach more people.
If you have worked with traditional marketing, it is time to improve your way of advertising because times have changed, and the way of giving visibility to a company has evolved thanks to globalization. For this reason, in addition to flyers and business cards, it is time to include social networks, web pages, and online advertising, among others.
Act local, think global. This means being part of events, conferences, and fairs to surround yourself with other outstanding professionals and thus expand your business relationships. Also, you can teach free courses and classes to attract more people to your enterprise.
The internet is a great companion if you want to promote your business. If you want to contact business partners or just professionals who you know can help you, grab their emails on Leadar. If you want your company to show up in Google Maps results and gain more popularity online in general, create a Google Business Profile.
Remember that marketing has become an effective way for brand positioning. It can help you attract new clients and generate new business strategies.