First off, please read the following quote carefully:
Profit is not the legitimate purpose of business. The legitimate purpose of business is to provide a product or service that people need and do it so well that it’s profitable.
-James Rouse, pioneering American real estate developer
Point made. Now, we proceed.
Cut-throat competition in today’s marketplace continues to narrow the possibility of better profit margins for most businesses. Even the big corporations are feeling the heat. And, with the increasing variety of products on offer (this is true for most industries), customers have become more picky and less inclined to stick to any single brand for long- unless they’re getting what they want from it. In such a consumer-driven, error-punishing business climate as this, how can you ensure that your business becomes profitable, and stays that way?
Actually, a basic answer to this question lies in the James Rouse quote referred to earlier. You have to keep your eyes on the right thing- giving people
what they need -if you’re going to stand a chance of doing well. Don’t go into business just to squeeze money out of people. If you do, you’ll fizzle out somewhere along the line. Be in it to add value to people’s lives, something they’ll appreciate enough to want to pay for.
It’s about seeing the world from the eyes of the customer. But it’s also about knowing how to stay the course, removing or surmounting impediments to reaching your goal. Find the right balance between these two considerations, and you’ll be on the road to sustained profitability. Here’s how to do it.
- Sell products that people actually want
This should be a no-brainer. But it’s amazing how many people don’t pay attention to this point. You’re not going to get much from opening a high-end cinema in a third tier city whose inhabitants barely make enough for their trade to buy your tickets every month. They’ll just have themselves a good time at the local pepper soup joint or sports viewing center instead.
Be sure that you’re selling the right product to the right market. No matter how hard you try, you won’t be able to convince many people to buy something that they don’t have the means of paying for or accept services they despise.
Do some market research. Find out what people need, and provide it to them for a fee. The higher the demand for a product or service, the more money you’re likely to make from selling it- if you provide it in a way and form that your buyers will be satisfied with.
- Improve product presentation
Other factors held constant, customers will choose a product that’s packaged in an attractive wrap over one that comes with duller packaging. The road to profitability begins with the visual experience a potential buyer has to deal with. Present your product in an aesthetically appealing way, in order to get greater attention and more sales.
Product presentation also involves the verbal and written communication a seller has to have with his or her buyer (speaking physically with customers, or physical and online marketing content). Here, emphasis should be placed on showing the buyers
what the product is and
why they need it.
These measures, taken together, could increase patronage significantly, if they’re implemented creatively and with an understanding of each customer’s expectations.
- Raise prices
Maybe you came upon this heading and thought, “yeah, I wish I could afford to do this.” But you can. If you are concerned that raising prices could shoo customers away, do not fret. Find out how to engineer a successful price increase in our article,
How To Raise Prices Without Losing Customers. Thank me later.
- Cut costs
It could be that there are black holes in your business that are sucking in a significant amount of funds but delivering very little in return. You can find out by taking a look at your financial records. Discontinue periodic expenses that you can do without, and buy supplies at reduced costs (compare the prices of various suppliers and the quality of products they’re offering; select the one that strikes the right balance of cost and quality for you). Revamp or drop processes and products that aren’t generating income as you expect them to.
A successful attempt at driving down costs will result in higher profit margins for your business- that is, if you are able to maintain revenue from sales at the level they were prior to cost reduction.
- Set periodic sales goals
Annual company targets aren’t for big corporations alone. Small businesses could do with setting annual or even monthly sales goals of their own. This will help them stay focused on marketing and increasing their revenue.
An example of this kind of goal could be improving sales of particular products by 10 percent. Steps which could be taken in the direction of achieving this goal should also be clearly outlined, and acted upon.
Your business can be more profitable than it is right now. This article has shown you how. It’s time for you to apply the tips here. Don’t procrastinate. Do it now.
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This article was first published on 23rd October 2017
ikenna-nwachukwu
Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.
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