Most Underrated Methods for Increasing Profit Margins in Business
I know Mr. Rufus as a successful business owner who runs a chain of hardware shops within my vicinity and as a plumber, I cannot escape buying my supplies from him. The pandemic really messed up our businesses but Mr. Rufus was still strong in business. Is it because he has run the business for 15 years and knows how to manoeuvre? Not only is he successful, but also popular and gives advice on different aspects of business. Increasing profit margin is what most businesses would like to hear but to my surprise, Mr. Rufus never wants to share the secret behind it. Therefore, I decided to find it out by myself. Many companies in Kenya do not last till the end of the financial year due to low-profit margins. Here are the secrets of increasing profits margins used to beat all odds.
- Enquiring Referrals from Clients
One can request their current or former clients to refer them to their friends and relatives who need similar products and services. If the client enjoys the quality services, they can refer one to the next potential client. Referrals are a goldmine to a business for one can acquire a long-term opportunity to serve multiple clients.
- Provide aftersales services
One can increase the volume of goods purchased by a customer and strategize this by adding together services and products into packages. For instance, if a customer buys iron sheets, nails, and other building materials in bulk from hardware. A business owner can charge a reasonable delivery fee to their premises or sell with an inclusive delivery fee.
- Cutting Down Unnecessary Expenses
In a business, the owner should cut down on expenses in every way possible. In a financial year, if one cuts down unnecessary expenses, the profit margin can increase drastically. On the other hand, one should avoid purchasing things the business does not need. On the other hand, buying things that do not add value to the enterprise should be avoided.
- Find out why people are not buying from you but other sellers
Is there another competitor that is doing better? How can you make sure that you cut a piece beyond your competitor? Gather all vital information that may lead you to better opportunities.
- Follow Up with Undecided Prospects
There are times when a client requires to buy goods in bulk and requires a quotation. Once the client takes too long to respond or gives feedback or getting back to you, a well-planned follow-up can result in an incredible deal.
- Ensure all Existing Customers are Aware of all Services
Customers should be enlightened about all services offered in a business. For instance, in hardware, one can add roofing services to clients who buy iron sheets; on the other hand, building services for those who purchase building materials. It is easier for an existing customer to pay for additional services than getting a new customer to pay for extra services. Always talk about another kind of service that the business offers.
In conclusion, managing a business is not a walk in the park. It requires dedication, discipline, and strategy. Profit margins in business do not add up quickly if the right plans are not stipulated. Business owners should follow the methods elaborated above for them to add more profits to their businesses. Money connects between the lines.