Every business should be thinking about its profits at least a few times a week. Similarly, every business needs some good profitable business ideas to ensure that your funds stay in the black and your business is happy and healthy.
We've compiled 6 ways to help you trim excess costs and give your profits a nudge onwards and upwards.
After all, if your business is not making a profit then it's destined to eventually run out of steam; future investment becomes difficult, dealing with lean periods or economic downturns will be hard to ride out because the savings safety net is not in place.
Some of our 6 profitable business ideas will take time before they pay off, but hey everything comes to those who wait!
Let's get to idea number one:
1. Address your cashflow issues
Does your SME have any cashflow issues? Then now's a good time to start taking a look at addressing them and turning things around. Major cashflow issues tend to fall around excess expenses and poor payments of invoices by your clients and customers. Even just tackling these two issues alone will help cut costs whilst putting your incoming monies back on track.
On the other hand, maybe your company's cashflow is in great shape, but it never hurts to check: every business has a few expenses that could be adjusted, changed or renegotiated to help boost those bottom lines for relatively little effort.
If you want to make sure you're in tip top cashflow shape then we have a good article, Top 3 Causes of Cash Flow Problems in SMEs and How to Solve Them, that you can read to delve deeper.
2. Outsource some of your profit-zapping, time-heavy tasks
There is a balance that exists somewhere between the expense of paying to have someone take care of some task or other for you, such as your IT infrastructure needs, and the expense of time in managing it yourself.
If you're a small B2B business running your own IT training or coaching consultancy, then you will have considerable expertise in such a field. However, you are likely to have either little or no skills or expertise when it comes to accountancy and payroll. Since you're a smaller firm and can't afford to hire an in-house administrator or book-keeper, then it would make sense to outsource your accounting to a qualified accountant. The alternative, although seemingly cheaper (i.e. doing it yourself) will involve either half a day or so a week, or a much larger period a few times a year, to keep on top of figures and expenses. This is time that could be spent growing your business, networking, or actually doing more paying work!
A more real-world example comes from my own network. A web solutions company utilised one of their software developers with some server knowledge to build suite of development and staging servers, literally housed on-site in the office. Everything was fine for a period, but eventually the system experienced frequent catastrophes (about 1 a month) where backups would have to be frantically scrambled for and restored before work could continue.
Whilst this didn't affect customer service or any front-facing products, it took said developer out of action for up to a day in order for him to correct things, and affected the wider development team as updates couldn't be pushed to testing servers, and we all know time = money...
At this point it would be worth investigating the cost of setting up a cloud server with a company, such as Rackspace, who would be able to take care of any support issues on your behalf and who have specialist technical hosting knowledge and skills.
3. Increase your prices
OK, that's a bit of an over-simplification. If upping your profits was as straightforward as increasing your prices then everyone would be doing it all the time.
But there are a few ideas around pricing and margins that can really help:
- Take a look at your pricing structure - could you charge more for certain products of services? Maybe your competitors charge far more for the same service as yours and so why not bring your offering in line?
- Cut costs without cutting corners - is there a way you can offer the same products and services for the same price, but deliver them with less cost to your business? For example, if you spend a lot of time with paper-based forms and administration, this could likely be digitised and automation introduced to increase your margin going forward.
- Examine what your most profitable items are and bolster them with up-sells - if you can't increase prices, then finding a way to offer additional complimentary services as up-sells to your standard offering will boost sales.
- Try to phase out or remove completely your least profitable items - big business brands can afford to run products and services as loss-leaders, but most SMEs aren't in a position to do this. If you have a number of products or services that either barely make any money for the business, or worse make a loss, then look to either move customers to the next service tier up, or remove these products and services as soon as possible.
4. Examine your marketing habits & build an effective marketing strategy
How effective is your current marketing strategy? Do you have one? How is it measured?
By looking more closely at how you currently talk to your potential customers and target them through advertising you should be able to highlight some areas that are working well and focus on them; more importantly you can trim away the avenues that are less effective - is that £2000 a year print advert doing nothing for you? By ditching it you've instantly saved £2000!
We're all about inbound marketing strategies at Red Guerrilla. They're over 54% more effective on average at generating leads than traditional marketing methods such as print advertising and interruptive ads on screen. In turn, companies can save over £15,000 per year by investing in inbound methods (facts courtesy of HubSpot).
We have a guide to inbound marketing if you'd like to learn more.
5. Start networking
Every business has to advertise, there's no way around it. However, advertising comes in many forms and whilst traditional marketing methods are become less and less effective (therefore the average cost-per-lead is actually on the rise!), you have to make a choice as to how you want to get your message out there to your market.
Enter business networking. There are a lot of different networking groups out there: some local; some national; some paid; some free; some good; some bad. You get the picture. So how do you choose the right one?
Well it depends on a number of factors:
- How much time can you commit to attending one? If you can only attend a networking event once a month then that's fine, but groups that meet once a week and are more rigid about attendance might not work for you. Flexibility is great, but the more you put into networking the more you get out.
- Would you prefer to network over a wider area to cover different geographical markets for your business? If so, a networking group like 4Networking might suit you. 4Networking in particular works really well for us here at Red Guerrilla, as it has about 12 different meetings within a 20 mile radius of our offices - so plenty of opportunities to meet new businesses and explore referrals.
- How much can you afford to pay to join? Some networking groups - usually local groups - are free, whilst others can cost a significant amount per year and per meeting to attend.
If you're new to networking then it might not look like an appealing option; it really does work well, but it is a long term investment. Business is still all about trust, and relationships with real people. As a B2B business you'll know that people don't like to take a 'punt' on who they deal with. Networking is great to build up a rapport and trust with potential clients and position yourself as an expert in your field each time you attend.
6. Look at your workload to staff ratio
This is where the difficult and awkward decisions have to be made. Staffing is usually the number one source of expenses for any business. Unfortunately it's also the number one go-to in tough times in order to claw back some capital into the business.
However, if you're company workload is far less than your staffing resources then it's probably time to take a look at how you can change up your workforce to make the most efficient use of your resources without having to think about redundancies.
- Introduce contracts with lower hours - no, nothing drastic like the ever-controversial zero-hour contracts, but could an employee be switched from 25 hours minimum to 18 hours minimum, for example?
- Develop more hybrid roles - rather than pigeon-hole some members of staff into single vacuum-points of knowledge and responsibility, which eventually limits their ability to perform wider-skilled tasks when needed, you could expand their skill-set where possible. For instance, most of our staff at Red Guerrilla are what we call 'hybrid marketers'. That is, they possess skills in content production, social media, some design skills, and some web development skills. This doesn't make them a replacement for a true software developer, but it allows them to adapt to the changing marketing environment and deliver to the range of needs our clients have.
- Root out your workload pinch-points and bottlenecks - similar to the previous point, but if you have a particular process that facilitates a build up of work whilst other team members' work drops off, or is otherwise held up (such as developers waiting on designers to create and deliver final designs to work from) is there a way to spread the work more evenly, or have the employees at the other side of the bottleneck jump on tasks such as networking, or marketing? By balancing the workload more evenly you'll be able to progress much faster, take on more work more effectively and make more use of your resources.
That's it. Go forth and be more profitable!
So there we have it: 6 simple (and not so simple) profitable business ideas. Before long you'll be a profit-churning machine. Do you have any tips for B2B businesses? Leave them in the comments and we'll share the best ones.