No matter how big or small your business is, increasing revenue is always a core goal. Smaller companies might urgently need to boost profits to survive; larger businesses use extra funds to expand.
Just as the goal is a shared one among all businesses, so are the strategies you can use to meet your target. You donâ€™t have to find new ways to make money because previous successful companies have already shown us how to do it right.
When you need a revenue boost quickly, these three essential strategies have been time-tested and proven. Entrepreneurs have used them for decades. As you add them to your businessâ€™s plan, watch the profits add up.
1. Cut Your Costs
In your personal finances, the first way you free up money is to cut unnecessary expenses. This same strategy works in business economics.
Cutting costs doesnâ€™t have to be extreme. For example, thereâ€™s no need to start laying off employees until youâ€™ve tried other avenues first. Before your budget becomes dangerously tight, start reducing expenses through methods like:
- Shopping around for better rates on insurance (health, workerâ€™s comp, disability, business automobiles, etc.)
- Looking for cheaper suppliers with quality goods or working out a discounted rate with current vendors
- Lowering your phone, streaming, and/or other plans
Moving out of a brick-and-mortar business and going online-only is another cost-cutting strategy weâ€™re seeing a lot lately. As most of the world turns to e-commerce, the overhead of an office or in-person shop becomes unnecessary.
2. Increase Prices
This strategy is one to approach with caution. It is by far the easiest one for you because you donâ€™t have to do very much besides changing your prices. But it could backfire, causing you to lose clients.
The key is to check with your competitors and the market in general. What are most people paying for the same services or products you offer? Is there wiggle room between what youâ€™re charging and what theyâ€™ll pay?
If your service is superior, you might be able to justify charging slightly above market value because you offer a niche. However, if you have a lot of competition, people are probably coming to you because your prices are reasonable.
Follow the Netflix Example
Streaming services are an example. There are more and more choices available for consumers all the time. Netflix and Amazon still remain in the lead, but AppleTV and other companies are on their tail.
To increase revenue and make up for canceled subscriptions, Netflix raises its monthly fee. If it was a big hike, going from $9.95/month to $15.95/month, a lot of customers would likely go elsewhere. Instead, Netflix could set an ultimate goal of $15.95/month and get there by raising its price $1.00 at a time.
That small rise isnâ€™t enough to cause most people to bother canceling and searching for a new company. However, it will still increase their profits substantially.
Your company could benefit from the same type of strategy. Set your ultimate goal of how much you want to charge, then get there by raising your price in small, barely noticeable increments.
3. Change Your Billing Strategy
How are you billing your clients? If itâ€™s straight cash for product/service transactions, thatâ€™s excellent. Youâ€™re not losing any money in the funnel system of invoicing.
But if youâ€™re like many businesses, you provide the service and wait for the client to pay. Itâ€™s a centuries-old financial system, yet, your processes might need a 21st-century update.
Streamlining Your Billing Processes
To start, are your invoices manually created or automatically generated? Sophisticated customer relationship management systems (CRMs) do the invoice generation work for you. If you donâ€™t already have a software system, investing in one could easily boost your profits and increase your free time.
How are you ensuring clients pay on time? You have expenses that need to be covered and your creditors expect payment by the due date. Encourage timely payment by offering discounts for early or automatic monthly payments. Tack on late fees for anything paid after 30 days.
If your business has a lot of working capital tied up in invoices, check out this article by Now for ideas on how to get paid faster.
You receive the cash youâ€™re due minus a small fee. The headache of waiting on payments disappears. Now, you can focus on running your business instead of chasing down late-paying customers.
Getting and keeping an SMB successful requires a lot of precarious juggling. Everything from customer service and product offerings to how you handle your revenue is a part of this process.
With these three business strategies, your revenue will increase without a lot of effort on your part. As you increase your profits, your targets can move to expanding your business or enjoying your success!