Small businesses don’t have to be small or un-profitable forever. The history of corporations shows that companies that began small—at homes or even in garages—flourished to become large, multi-national corporations.
Don’t believe it?
What began as a small restaurant in Corbin, Kentucky in the US and now ranks as the world’s fourth-largest food franchise chain. You guessed it—KFC. Colgate toothpaste traces its origins to a humble candle factory in New York City. Similarly, the founders of Airbnb were thousands of dollars in debt when trying to keep the company afloat, resulting in selling cereals. Today, they’re a $25 billion company.
The moral of the story here is: if someone has done it before, you can too.
Blunders to Avoid
Before we dive right into how to do it, it’s equally important to highlight what not to do. Small businesses often commit blunders that may result in low profits.
- Underpricing your product or service to overcome competition. Doing so severely damages your brand reputation as consumers will view it as inferior, due to its low price.
- Not using a catchphrase. Great catchphrases can define your small business and attract clients. It is a myth that catchphrases are only for large companies. General Electric adopted its catchphrase: ‘We bring good things to life,’ much before the company made its mark across the USA.
- Improper branding. Select a brand name for your small business that is easy to remember and attracts attention. Some great examples are Pampers brand of diapers. Parents pamper their newborns and hence, the brand is easily remembered. Energy drink brand Red Bull signifies that it gives bovine-like energy to consumers.
- Comparison with rivals. Doing so is a colossal blunder. It signifies you have no confidence in the quality of your product. You can expect retribution from the competitor, who may be financially better positioned. Inadvertently, your brand will be seen as a substitute for the competitor rather than standing upon its own merits.
- Wrong packaging. If you are selling a product, the first thing that attracts customers is the external package. However great the contents may be, buyers will shun the stuff if the packaging does not appeal to their aesthetics.
Striking It Rich
Understandably, times have changed since KFC delighted palates of Corbin residents and Airbnb continues to empower anyone to travel anywhere. Globalization of economies and mushrooming start-ups mean that small businesses now face stiffer competition than ever before.
As a small business owner, you understand the struggle of lacking funds for advertisements and cutting prices to compete with established brands and businesses. Often, it even means lower profits. In these cases, small businesses like yourself may find it difficult to strike rich.
Regardless of the situation, you find yourself in, here are a few simple ways (and tips) you can use to make your small business more profitable.
Tip 1: Beware of Complacency
Many small business owners falsely believe that there is no further scope for expanding their business. These business owners fall prey to complacency which occurs primarily due to lack of sufficient funds or incorrect understanding of markets. Some small business owners wrongly think their products will not be accepted outside of the market they currently operate in.
Once you make your small business more profitable, getting money through crowdfunding platforms, venture capital, or loans from banks and other lenders becomes easier. There are several ways to raise money for your small business. This can help you expand your product and service offerings, and venture into areas outside your home turf.
An old proverb states: “The only limits are the ones you set yourself.”
You can easily overcome these self-made limits by adopting marketing strategies that will popularize your products and services in distant markets.
Tip 2: Leverage Social Media
Thanks to the Internet, you have access to free social media websites and apps including Facebook, Twitter, Instagram, as well as other sharing platforms like LinkedIn, Pinterest, and YouTube. The rise of TikTok stars and the algorithm it places on content creators make it the ideal platform to exponentially grow your business presence quickly (via the For You Page)
Make your presence felt in the market on these websites and apps. With some creativity and thoughtful planning, you can create engaging and attractive social pages that will not only boost the awareness of your business and personal brand but also be a place for you to connect with your customers. Instead of only creating content (like these companies), use your platform to respond to comments. Don’t be afraid to add some humor, so long as the engagement aligns with your brand and its mission.
Facebook and Twitter also help receive consumer feedback that’s vital for improving your products and services or curbing damage control caused by any adverse publicity. Instagram and Pinterest allow you to post images of your products while LinkedIn facilitates Business-to-Business (B2B) contacts. You can upload informative videos of your small business and its offerings on YouTube along with testimonials of satisfied customers.
Tip 3: Consider Amazon, eBay, and Others
If you run an eCommerce store, you may have considered launching an online store. But it can be quite costly if you’re just starting out.
That’s because it involves:
- Massive logistics and tie-up with banks for receiving payments
- You need to have a great returns and refunds policy if you want to be considered by consumers
- You have to keep all these things in mind while trying to popularize your online store through expensive advertisements
So if you’re in the business of selling products, consider a different approach instead. Make your small business more profitable by signing up as a supplier with e-retail majors such as Amazon and eBay, among others.
In the US alone in 2020, Amazon attracted 200 million visitors per month. That’s a lot of eyes looking for products that may be similar to yours. Especially for small businesses just starting out, your small business can really benefit from Amazon’s logistic chain management and payment systems. That’s fewer pain points and headaches that may come along with the “do it yourself” approach!
Tip 4: Focus on After-Sales Service
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Poor after-sales service to customers is the bane of almost every small business. Small businesses often lack resources that larger companies have to hire a skilled after-sales service team. In these scenarios, look for people who are willing to work part-time or moonlight for you to earn extra cash. Also note that while your product may meet and exceed internationally accepted standards, there will always be clients who will find reasons to complain or may face genuine issues with your product or service. (That’s why understanding contingent liabilities is key).
A great way to boost after-sales engagement is to centralize all client information in one place. In TrulySmall Accounting, we simplify tracking with our intuitive accounting software to make after-sales service more effective. Keep track of all client information including their purchases and billing details, as well as invoice them right within our double-entry accounting software. View important details like Total Invoiced # under the Contacts Feature and key metrics like Fiscal Year Total, Average Time to Pay, Total Outstanding, and Past Due via the Invoice Feature. These metrics and dashboards translate into actionable data for you to improve your after-sales service. After all, great word-of-the-mouth publicity for your business from existing, happy customers is the best type of marketing to increase profits.
Tip 5: Innovate, Always
Innovation is the key to success for any small business. SuperJam, started by a Scottish teenager, who went on to become a teenage millionaire, is a great example. Schoolboy, Fraser Doherty, made jams using traditional recipes from his grandma that he sold at community halls and small stores. Doherty began innovating his products by maximizing the fruit content of the jams. Customers always look for higher quality products at the right price, which is what lead to him improving his jams.
Depending upon the nature of business and expertise you possess, continue innovating and improving the quality of your merchandise or services. Always think bigger and if possible, one step ahead of your competition so that you’re not keeping up with the curve—you’re getting ahead. This attracts more customers and eases the marketing process. Armed with superior quality and reasonably priced products and services, you can make your small business more profitable. Innovations and improvements can help your small business compete at par with giant players in the market.
Small Steps To Making A Big Impact
Entrepreneurs now have access to endless resources (including our business roadmap) to make their small businesses more profitable. Using the proper accounting software can help make managing your transactions and billing your clients easier while allowing you to see exactly what your business’s current financial standing is.
At TrulySmall, we make it simple for you to ensure that you are on top of your client management and post-sales service. All details are directly synced to real-time financial metrics that you care about. Interested? Try TrulySmall Accounting today for free and see how easy it can be. With the proper tools and some creativity and effort, you can make your small business a highly profitable venture and possibly enter the big league.