Tips To Overcome The Issues Limiting Your Business Profits
Be it big or small, office-based or home-based; your business needs to make a profit if you want to keep your doors open. You know it, we know it, and your bank manager probably knows it too!
However, there are some issues that could prevent your business from becoming profitable. So, no matter the size or type of your business, it is important that you consider what these issues could be, and most importantly, find ways to overcome them. In this article, we will be taking a look at some of them. So, have a read, and if anything relates to you, do what you can to overcome any current or potential problems.
1. Bad Word-Of-Mouth
Customers: They are the lifeblood of your business. The more customers your business receives, the more profitable your business will become. The fewer customers on the other hand…well, you don’t need us to tell you of the consequences.
But here’s the thing. The number of customers you receive could be affected by the word-of-mouth other people generate. If you have happy customers on your side, you can generally assume positive word-of-mouth will be spread on and offline by the people who have used your business. If you have unhappy customers on the other hand, the opposite will be true. And why would customers generate bad word-of-mouth? Well, if you upset them in any way, perhaps through poor customer service or a low-quality product, then you might incur their wrath. Here are some of the customer complaints that are common in business today, and that you need to be aware of.
To prevent bad word-of-mouth, your business obviously needs to be the best that it can be. Focus on providing excellent customer service, being sure to respond to calls and emails quickly, and by using a small business answering service when you’re unavailable to your customers. Focus on quality with your product, your delivery service, and all other aspects of your business. And if you do upset a customer, quickly make amends to them before they start to tell others about their grievances.
By taking such steps, you are more likely to generate a positive buzz about your business instead of a negative one.
2. Too Many Overheads
There are all kinds of things you will need to pay for in business. You might need to rent an office space, for example. You will be reliant on certain utilities. And you will need the necessary equipment and software tools to run your business successfully.
However, you won’t need to rent a gigantic office space if it’s just you and a couple of coworkers. You won’t need to have the latest and greatest pieces of equipment if they are unlikely to be used very often in your business. And you won’t need to spend money on certain pieces of software when there could be free alternatives elsewhere. When it comes to each of these things, it could be said that you are simply throwing money away, especially when the expense of them rolls over monthly.
So, rather than spending too much money, look for ways to save money in your business instead. Work from home instead of renting somewhere, or at the very least, rent an office space that is conducive to your needs. Lower your utility bills by switching providers and by removing any needless pieces of equipment that are adding to your electricity costs. Find ways to run your business cheaply or freely before assuming you have to pay over the earth for an expensive subscription or purchase. And find other ways to lower your overheads. As soon as you do, you will have fewer things eating into your profits each month.
3. Setting Your Prices Too Low Or Too High
It’s a difficult balance to set, we know, but you need to be careful. If you set your prices too high, your potential customers might assume you are trying to rip them off, especially if they can pay cheaper elsewhere. And if you set your prices too low, you will run at a loss if you spend more in production, and your customers might equate your low prices with poor quality. Either way, your profit margin will be negatively affected.
To set the right prices, you need to keep an eye on your competitors. Find out what the going rate is for products or services of your kind, and then price what you are selling competitively. Know too that it’s okay to raise your prices if the quality of your product and service outmatches that of your rivals, as your customers generally won’t mind paying more if they know you are offering something better. However, test the waters first, and if you notice a drop in your profits, consider altering your pricing if you need to.
For more advice, check out this guide on pricing strategies. And then commit to further research to find out how to set your prices in such a way as to profit and not make a loss in your business.
4. The Might Of The Competition
It might be that your pricing strategy is fine, and you might have a handle on your business expenses. However, if your competition is stealing away your current or potential customers, then you are going to see a knock-on effect to your business profits.
To beat them, you have to find ways to better them. Making changes to your product or service could be your first option, especially if your rivals are offering something better than you. You might need to concentrate on a marketing push too, as the greater your profile, the greater the chances of customers choosing your business. And you might want to sway customers to your side, perhaps with a customer referral program to encourage their loyalty to you.
For more suggestions, check out this article on beating the competition, and use the ideas within to claim a greater foothold in the marketplace.
We have discussed just a few of the issues that could limit your business profits. We hope what we have said has been useful to you, but continue your research online, and take action to overcome any other problems that could affect you financially.
[a contributed post]
Owning your own home is a major achievement and something that many people aspire to. Once you’ve purchased a property, however, it’s more important than ever to manage your finances effectively. To ensure you’re a step ahead, take a look at these must-know money tips...
Managing your finances should always be a top priority but a surprising number of people overlook the importance of having an emergency fund. Even the most comprehensive budget can’t account for every eventuality, which is one of the reasons why having an emergency...
Father’s Day is almost here, but how do you say “I love you?” Use these budget-friendly Father’s Day gift ideas to rock his world without breaking the bank.