WAYS TO BOOST YOUR SMALL BUSINESS PROFIT

WAYS TO BOOST YOUR SMALL BUSINESS PROFIT

1. INCREASE DOLLARS OF GROSS PROFIT BY INCREASING TOTAL SALES

  • Make sure advertising is effective – monitor each program and either keep it as-is, refine it, or drop it.  Don’t just change it for its own sake, if it works!
  • Make use of in-store displays and demonstrations
  • Make sure the exterior appearance and identification of the business is clean, professional and helps customers find your store
  • Employ effective, hard-working sales staff (and train and motivate all people to stay that way!)
  • Seek referrals from existing customers
  • Seek referrals from related businesses

2. INCREASE THE AVERAGE SALES SIZE:

  • Sell higher quality or enhanced features
  • Use merchandising and display to group related products together or to promote seasonal lines
  • Look at your stock and sales mix to ensure that they closely match each other
  • Sell accessories or add-on products
  • Increase repeat trade from customers:
    • Through positive, friendly and helpful staff
    • Sales staff members’ ability to understand customer needs – promoting only the products of genuine value to the customer
    • Business image/appearance/housekeeping
    • Provide regular follow-up
    • Provide high quality service

3. MANAGE THE MARGIN

  • Avoid the factors that reduce your closing stock:
  • Eliminate shoplifting of minor items with: vigilant staff;  well-located cash registers; use of mirrors etc to provide good supervision of all areas
  • Eliminate staff pilferage of minor items, through suitable penalties, training, etc
  • Eliminate or minimise damage to stock while it is in storage or on display – place it in suitable locations and use display units to protect it
  • Make sure that all stock received is checked against delivery dockets or invoices, so that you only pay for what is actually received in good order and condition
  • Make sure damaged stock is returned to supplier for replacement or credit

4. ELIMINATE OR MINIMISE HIGH-COST PURCHASES:

  • Avoid placing too many small orders with high freight costs
  • Avoid dealing with too many suppliers – you’ll lose quantity discounts
  • Avoid carrying too wide a stock range (again, losing the scope for volume discounts)
  • Take advantage of settlement discounts where they are worthwhile
  • Plan purchases according to likely demand or seasonal factors
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