Welcome back to my discussion about profits! If you remember my last post, I set the record straight about what being profitable is and isn’t—while busting some myths along the way. (If you want a refresher, read my last post here.) Remember, your profit is what you have left over after all your expenses are paid, all your specific savings are accounted for, and after you’ve paid yourself. Now that you have a solid understanding of what profits are why they are so important, it’s time for the good stuff! Here are four tips for you to increase your business’ profits!
Set a goal & track it daily.
The first way to increase your profitability is to set a growth goal and track it daily. Yes, it can be that simple! Sometimes the only issue preventing our growth is that we don’t have a revenue goal to begin with! If we don’t have a clear target to hit, how can we expect to grow our profits?
At my business, Be Inspired Salon, we have a monthly revenue goal that we break down into daily goals. Every day, our administrative manager emails me the revenue from the day prior, along with the weekly goal we need to achieve in order to maintain our revenue expectations. Our budget is tied to these numbers, and we share this openly, so everyone on our team is motivated to bring in clients. The real goal here is to have a number to work towards that we track against to hold ourselves accountable.
Stop offering discounts.
The second way to increase your profitability is to STOP offering discounts. Have you heard the saying, success is what you say ‘no’ to? For example, if I wanted to be successful in my pursuit of being super fit and healthy, I’d probably say no to eating fast food. If I wanted to get out of debt, I’d probably say no to friends when they ask me to go on weekend getaways — at least until I am debt free, of course! You get the idea. We don’t have the time in this blog to go through all of the reasons discounts don’t work, but what it comes down to is this: you’re going to attract fickle guests who are easily swayed because you’re using devalue-based propositions. It’s just like shopping at Bed Bath & Beyond without coupons, you wouldn’t do it! Why? Because you know everything in the store is actually worth less, so you’re not willing to pay more. Remember this, people don’t want to pay less, they want to be given more! There are many ways to offer value to your guests’ experience without devaluing your services, products, or people. To learn more about how to get new clients without offering discounts, watch this video!
Increase your prices.
The third way to increase your profitability is to charge more. Seems simple, right? Then, why are we so scared to increase our prices? Our CPAs, attorneys, product companies and contractors are all very willing to increase their prices on an annual basis. We come to expect and accept that is the price of doing business with the people we trust and like to work with. Why would we look at ourselves any differently?
Did you know inflation increases annually by about 3 percent? This is why we must always be in growth mode! Inflation doesn’t have to be the only reason that you increase your prices. Any time that you add value to your clients’ experience, you can—and should!—increase your prices.
Here are some examples of reasons that I’ve increased prices at my salon:
-All stylists at my salon are now certified in (fill in the blank).
-We offer a new shampoo experience including a hand massage, aromatherapy, and steamed towel.
-The stylists have been promoted to higher levels related to their benchmark achievements and productivity percentages.
Of course, these examples are specific to the salon industry, but they can easily translate to other industries, as well. Do you operate a fitness club? Maybe all your employees have completed an advanced certificate in nutrition or fitness. Let’s say you have a brick and mortar clothing boutique; maybe you remodel your space to include a small café with complimentary coffee, snacks, and other beverages to enhance the shopping experience. The possibilities are endless and all should result in increased prices!
Finally, the fourth way to increase your profitability is to THINK BIG! When you’re in growth mode, you’re thinking about all the ways to grow your team, your guest list, your brand, and your long-term potential. As mentioned earlier, this could mean you buy a building! Imagine if your business rented space from you, and you were also able to rent out additional space to other businesses? You essentially get into commercial real estate. Would this shift help you increase your profitability? I’d say so! You could also divide and multiply. Meaning you open second, third, and fourth locations. If your systems, processes, culture, and training procedures are in place, this can be easier than you may think! There are so many ways you can grow profitability if you’re willing to think beyond what’s currently tangible. I hope you’re as excited as I am to think about all the ways to think big, innovate, and watch your profits soar!
Which one of these four tips are you going to take first? I suggest taking one concrete step today toward your goal and building on that step every day! I hope you found these four tips helpful, and for more ideas on how you can increase your profitability, please reach out!