As an entrepreneur, there’s only one goal you should be aiming at – “To turn your business into a wealth-creating asset of value.’’ This perspective is according to renowned Venture Capitalist and Business Growth Accelerator, Pavlo Phitidis.
A business is an asset of value if:
- It is sellable.
- It is fundable.
- It has continuity (i.e., it can keep on going even after you have left).
Here are a few tips to help you get on your way:
- Build something special. This means creating a business that solves a particular problem in a particular way.
- Make sure your business is not solely dependent on you. Build a business based on systems that can run without you.
- Be passionate about your business and purpose-driven. “Purpose is the antidote to being overcome by passion. In any entrepreneurial endeavor, the purpose should leave the legacy of the effort in play when you move on.
- Diversify your revenue streams.
Now let’s go in-depth: Owning a business and running it well is not for the weak. It requires bold-minded individuals who have good organizational skills. Additionally, to succeed in business, you must be ready to face challenges and severe risks.
Today, every business owner wants to make more profits than his or her competitors. However, as an entrepreneur, it is not possible to increase profits in your company without coming up with an effective strategy that will beat the competition. You need to understand that there are variables that determine the level of profitability of every business. Therefore, in order to increase your profits, you must work hard to improve these variables. Some essential tips are as follows:
- Innovate: Innovation is the key to success for any small business. Super Jam, 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 innovation of his products by maximizing fruit content of the jams. Customers are always looking for higher quality products at the right price, which is what led to him improving his jams.Depending on the nature of business and expertise you possess, continue innovating and improving the quality of your merchandise or services. 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.
- Hire the Right People: You should not focus only on basic qualifications when hiring employees to work in your organization. If you want to improve your profits, you must employ staff who are driven by passion and motivation. Your workers should be creative and determined to achieve the goals of the company.
- Focus on Finding and Retaining New Customers Daily: You should attend networking events regularly to attract new customers to your company. As a businessperson, you need to spend most of your time interacting with your customers and informing them about your goods and services. After winning customers, you need to treat them respectfully. Once you treat them well, they will become loyal to your brand and play a significant role in making your business profitable.
- Eliminate tasks and activities that don’t add value: Every naira you save by eliminating the cost of things that don’t add value to your company or to your customer drops directly to your bottom line.
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- Increase pricing: If you bill hourly, review your billing rates and push them higher. If you charge per product, look for ways you can command a higher price. Could you add more value into a package? Improve your marketing and sales scripting to effectively sell at a higher price? Or could you just boldly increase your pricing?
Most businesses set their prices when their business was first launched, and since they were so hungry for business, they set pricing levels low. Over time, the business likely only made nominal increases to pricing every few years, but rarely did the owner ever sit down and fundamentally rethink his or her pricing model. Well, take a close look at your pricing now.
- Consistently look for ways to lower your fixed overhead: Scrutinize your base expenses to eliminate non-strategic expenses that just don’t add value to the company or to the customer.
Set optimal inventory levels and stick to them. Constantly be on the lookout for ways to safely reduce your inventory levels. If you have inventory, you’re unlikely to sell, scrap or donate it so that you can free up space and write off the inventory.
- Sort out your proposition or offer: What makes you different from the rest? Why should people buy from you rather than the competition? Be able to articulate the ‘why’ and ‘what’ of your business in a way that is truly effective. You should be able to do it in ten words or less.
- Get customers to buy at least 3% more often: Encourage your customers to come back more often, start sending out a newsletter or social media campaign to get them to visit more often. Check out tools like Typeform or SurveyMonkey for surveys, Google AdWords can be an incredible tool to target sales at specific customers through re-targeting too.
- Advertise Your Brand Wisely: You should hire experienced marketers to create awareness for your brand to your customers and prospects. Additionally, if you want to achieve more in your business, you must be ready to use unique techniques to reach your target audience. For instance, you should use social media platforms to create brand awareness. Also, you can start sending cold pitches, setting up sales calls, and sending customized commercial emails to your customers and prospects. If you get a good customers base, your profits will increase.
- Use Resources Well and Cut Costs: One of the perfect strategies to become profitable is by cutting costs in your business. You should get your raw materials at a lower price. Additionally, you need to work smart to minimize production costs. When marketing, you can start by using free resources like social media sites to avoid overspending. When you start getting good money, you can now start investing heavily in marketing and other operations.
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- Motivate and Empower Your Employees: Your employees require an excellent environment to perform their daily activities. A clean and favorable environment will motivate them and increase productivity and profits for your business. Moreover, your employees require training and inspiring messages regularly. Therefore, you should hire an expert every year to train and inspire them.
It is advisable to keep the records of your employees accurately. You can use a human resources database to track everything in your organization. The database will enable you to monitor the performance of each employee and work on their weaknesses to improve productivity.
- Analyze Your Competition and Be Creative: If you want your business to remain relevant in the market, you need to learn many things from your competitors. After learning from them, you can complement the best strategies that they use and apply them to improve your operations. However, to make your business stand out from the competition, you must be creative. It is advisable to come up with innovative ideas that will bring more profits.
- Provide Great Customer Service and be consistent: Your customers deserve excellent services whenever they come to buy goods and services. Therefore, it is advisable to make them feel valued by offering them customized services. Providing an excellent service will make them loyal to your company. They will always buy your services or goods instead of going to your competitors. However, you must be consistent in-service delivery to maintain a good reputation.
- Position Your Business to Where the Demand Is: You know what makes a business or product valuable? Demand. The more people want your product or service, the more you can charge, and the more volume you can sell. If you’re in a dying industry, it can be hard to create demand. You need to reposition your business. You can try expanding through marketing campaigns; however, they can be inefficient and ineffective long-term if you don’t have a clear strategy.
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The key to demand is to remember your new customers and clients probably look a lot like your existing customers and clients. Where can you find more of them? The demand for your product or service probably already exists. You don’t need to create demand, you need to position your business where the demand is! If you can find demand for your products and services, you will gain repeat customers who buy more and buy more frequently. Demand creates sales, sales create cash-flow, and every business needs cash-flow to be valuable.
In conclusion, you should keep detailed records to help you in understanding where your company stands financially. Proper record keeping will enable you to face challenges confidently and keep your business on the right track.