One thing that all entrepreneurs desire to possess is freedom. We want to set our own hours, be our own bosses, and even take time off when we feel like. For you to experience this freedom, your business has got to be profitable. There are only two ways to make your business profitable. The first one is to decrease your expenses while the second one is to increase your revenue. One thing that can ruin the profit margins of your business is profit leaks. Here are 5 tips for plugging the profit leaks in your small business.
1. Not Reviewing Your Business’s Financial Records Regularly
A major profit leak for your small business is assuming that the financial side of the business will be just fine even when you don’t know where your financial records are, let alone reviewing them. To seal this profit leak, you must keep all your financial records up to date. For most small businesses, weekly, bi-weekly or monthly reviewing works just great.
2. Failure to Budget for Your Business
A business budget is written a plan that outlines the income and expenditures of your business over a given time span, mostly one year. Budgeting is compulsory if you want to plug most profit leaks. A budget not only helps a business to know how to control money but also how to make more. Here is a video showing you exactly how to create a budget for your business.
3. Trying to do everything on Your Own/ Hiring the Wrong Team
Most small business entrepreneurs fall into the trap of failing to outsource or hiring wrong team members. To increase your business’s profitability, outsourcing and hiring the right team members is a major requirement. A wrong team is not only a major profit leak but also creates unnecessary stress. Ensure you hire a passionate team to seal this profit leak and to accelerate your business’s profitability.
4. Marketing to the Wrong Clients
Another huge profit leak for you as a small business owner is marketing to people who aren’t interested in your products/ services. Trying to market to everyone without a definite target group clogs your sales channels. On the other hand, having a targeted audience to market your products/ services to is the only way to seal this profit leak and to increase your profits.
5. Banking Fees
Banking charges can add up to huge costs if not carefully monitored. Make a habit of comparing the banking fees of your current financial institution with what is charged by other local banks. If there is a possibility of finding a better deal somewhere else, communicate with your current bank’s manager to negotiate for the same terms that you can be offered elsewhere. You might land a better deal without having to change your account.
Wrapping it up…
If you are striving to boost the profit margins of your small business, it is important to plug all the profit leaks and to increase your revenue. Identifying possible ways to plug your business leaks is the first step towards making your business profitable in 2017.