From keeping prices below the market average, setting the wrong objectives and not satisfying the needs of real customers, there is a never-ending list of challenges and issues that many small businesses might struggle with, and all of which result in problems with company’s profitability.
Irrespective of the stage of development, even on the early stages, when businesses don’t tend to create much of an income, the ultimate goal will always be to sustain operations and make a profit. Here is a list of some Dos for small companies to follow, and how Planium Pro software can help you to accomplish this goal.
It is important to know all of your company’s costs before you start focusing on increasing profits. You have to calculate general expenses as well as expenses associated with the regular activities of the business. The essence of profitability stems from the relationship between revenue and expense. To support the business and make good informed decisions, it is vital to get an accurate and transparent picture of the unit economics (direct revenues and costs associated with a particular business model and are specifically expressed on a per unit basis).
Planium Pro allows you to account and to better plan for all kinds of expenses your business might face in an easy and straightforward way and it can dramatically ease the creation of your financial plan. You can produce profit and loss statement for the initial year of your business operation and have the ability to update it anytime the more and various costs you carry in the future.
Due to the nature of some of the businesses, managers have to deal with low value and routine activities which might take heaps of time to be accomplished. That’s where automation is required. Business automation is changing the way businesses operate, allowing them to do more with less and scale in ways never before possible. Emergence of the mobile solutions that allow businesses to manage several processes (i.e. team and clients’ management, billing, etc.) from almost anywhere releases so much needed time to work on primary activities and goals of the business.
While writing a business plan can be a tedious and daunting task, Planium Pro makes this process much more streamlined, and saves hours of your precious time, so you could use standalone Marketing, Operations, and Finance modules to help you track the progress of your business.
Big or small business, online reputation is very important as it creates credibility to your business as well as shows customers or suppliers that you are not indifferent about them. Stay active on social media platforms and communicate with visitors regularly. You also need to add call-to-actions on your website and keep contact with visitors through web forms, live chats and landing pages. Depending on the activity of your business, you might want to run a blog on your website or engage in cross promotion or joint venturing. It could help you to increase profits by a good deal and will slowly but surely pay off in the long term.
Your overall gross profit margin could be misleading. Some items or products within your business can be low margin and loss-making, while some activities can be profitable. To identify them, you need to calculate separate gross profit margin on each of the product and service, and evaluate gross margins over different business divisions, product categories, suppliers or client categories. It can help you to make an informed decision to discontinue sales of low margin ranges and concentrate on the ones that yield profits.
Another potential barrier is a complicated purchasing process. Adding friction to the buying process reduces conversions and ultimately sales. If customers have to deal with a 10-step process in order to complete a simple purchase, they’re more likely to choose a competitor instead, meaning that you unintentionally leave money on the table. Your logic should start with buying process first, and work back to the revenue – and not the opposite. Effective buying experience results in more traffic, larger deal sizes, higher conversion rates and more customer referrals which eventually make those companies to grow twice as fast as companies that deliver average experiences.