The single most aim for any small business is to win more customers. The more the people rely on you and your offerings, the more market presence you will have. Building a strong customer base takes time, and that’s why as a small business owner you’d want to see rising sales figures month over month.
According to Small Business Trends, 40 percent of small businesses are profitable. Turning profitable means being cost-effective, utilizing your resources efficiently, communicating your existence, and avoiding any legal issues that could jeopardize your business’ existence.
Here is the list of the most profitable small business industries based on net profit margin:
- Accounting, Tax preparation, Bookkeeping, and Payroll Services: 18.4 percent NPM
- Lessors of Real Estate: 17.9 percent NPM
- Legal Services: 17.4 percent NPM
- Management of Companies and Enterprises: 16 percent NPM
- Activities Related to Real Estate: 14.9 percent NPM
- Offices of Dentists: 14.8 percent NPM
- Offices of Real Estate Agents and Brokers: 14.3 percent NPM
- Nonmetallic Mineral Mining and Quarrying: 13.2% NPM
- Offices of Other Health Practitioners: 13 percent NPM
- Medical and Diagnostic Laboratories: 12.1 percent NPM
These 5 tips will help you take action to drive your small business towards profitability.
1. Explore Marketing Options
Admit it! You thought people would eventually find you and try your product/services. And soon, you figured out how utopian it was to deny the marketing requirements. There are two ways to cater to marketing demands that your business would need to grow.
A. Utilize Social Media – Paid and Unpaid
There is only so much you can do offline unless you are running a local shop with no growth ambition. The social media channel is huge with plenty of media dedicated to a different set of users. Get your products out there on Twitter, Facebook, Instagram, LinkedIn, and even Tik-Tok. You have to get away from thoughts that confine you from producing content on these platforms. Most businesses are shy while some may even feel insecure about what the others will perceive.
Instead, create social posts on these mediums and start promoting, every day. You may then choose to promote some posts and test waters before spending more. The key is to produce content every day and increase your reach which would reciprocate in conversions over time.
B. Penetrate in Other Avenues
Now, penetrating other avenues does not necessarily mean burning a hole in your pocket. You can choose from any of the effective yet inexpensive ways of marketing to get the word going.
- Create a promotion kit and distribute it yourself.
- Start sending out promotional content with invoices and bags.
- Join professional organizations to leverage networking.
- Start roping in the local newspapers whenever you do any event or make changes in the business. Attract more local eyeballs by conducting charity events.
- Create awareness about your products and services by offering related workshops.
- Make affiliations with businesses in a similar domain and run cross-promotional offers.
- Get a database from a third party and start cold calling. You will be shocked to see the responses. Yes, it works!
- Don’t be ashamed to use your car as a branding vehicle. Show others in town how passionate you are for your business.
All these above-mentioned activities will gradually push your sales up and eventually raise your profits.
2. Stay Compliant
It is understood that small businesses may find it difficult to cope up with staying compliant. If you are looking to turn profitable in the long run, you will have to act like one. Start big with either the Pvt ltd company registration if you are looking to scale up soon. Alternatively, micro-businesses operating as proprietorship should turn to structured business as it brings credibility.
Start with getting acquainted with legalities involved in running a business as this can help you avoid hefty penalties in case of non-compliance.
Here is how you can start making your business compliant that turns it profitable
- Know all the rules and local laws. Consult a company secretary or hire legal service providers to know about it. For instance, you will need an FSSAI license if you are opening a small café, restaurant or creating a virtual kitchen.
- Start maintaining your books of accounts as this will help you identify financial loopholes and make tax filing an easy activity.
- Though not mandatory, getting your IPR is crucial. You can also then let other businesses use your brand name and earn a profit based on a franchise model. It will distinguish your business from the rest of the other competitors in the market and people will trust your genuineness.
3. Create a Strong Word of Mouth
Some things never grow old. And one such thing is a strong word of mouth. Businesses that turn to create great brands are the ones that have users who vouch for them. Remember, you are not just creating customers but evangelists who will propel your brand further down in the market. And such word of mouth does not remain limited to just your business locality or town. It goes on to the internet where other prospective customers will turn to such reviews before making any purchase decision.
When it comes to creating a strong, positive word of mouth, there is no shortcut. You will have to improve your service and product offerings with the sole intent to ‘give’ something to the customers.
The key is to encourage an existing set of customers to not just come back to you for a repeat purchase but spreading positive word mouth to their friends, colleagues and, families. Try implementing various ways that motivate them to push the word forward. Here is something you might like to try.
- Offering discounts and other perks for positive referrals
- Offering a top-notch customer experience that motivates customers to put positive words around – online and offline.
- Follow-up with the customers and ask their reviews and testimonies to promote that satisfaction level.
4. Utilize Website and AdWords
Small businesses tend to underestimate the web presence and it is something that needs to change. Start with creating a simple website that is easy and fast to publish. This will open up a new touchpoint for customers which in turn can help you increase business reach. Also one of the researches points out that 88% of consumers now prefer to research the product or service they are buying before making a decision.
Now, if you are thinking what to include in your basic website – here’s a checklist:
- Your business logo. Ensure you apply for trademark registration for your logo.
- Get your business name registration and make it visible on the website.
- Provide a quick summary of your business – service and product offering.
- The contact information like email, phone numbers and even linked Google Maps address.
- Have a vision/mission page to inform users why you are in the business and what makes you better.
- Include a few of the customer testimonials.
Also, as mentioned earlier, get a dedicated social media profiles for your business to promote it better. Make sure you are present on Facebook, LinkedIn, Instagram and Twitter at least.
5. Keep Innovating
Innovation is the key to success for any small business. There are many instances where someone like Frasher Doherty started making Super Jam using traditional recipes from his grandmother. Another well-known example is that of Uber taxi services that transformed what a mobile device could possibly do.
There are customers who’d not be hesitant to pay more for innovation. You should, therefore, look to offer quality products at the right price to turn your small business profitable. Also, you should look to patent your innovations that gives you the right to stop anyone from using such innovation. Customers are always looking for higher quality products at the right price, which is what leads to him improving his jams.
Depending upon the nature of the business and expertise you possess, continue innovating and improving the quality of your merchandise or services. It attracts more customers and eases out the marketing process. It is only through the innovations and improvements you can stay longer in the game and even compete at par with giant players around.
It is a great time to be an entrepreneur all thanks to the easy availability of resources and technology. Having such access has leveled the playing field for everyone in the business – big or small. For example, you don’t need to hire an accountant as there is plenty of accounting software to take care of billing and invoices.
Keeping a close watch on your daily cash inflow and outflow is the best way to stay aware of the expenses, and control it to see your profits steadily rising. It all boils down to investing in the right tools, following a confined method over time and keep pushing the business forward to turn your small venture highly profitable.
Shrijay Sheth is an entrepreneur with more than ten years of experience in working with hyper-growing digital commerce companies across the globe. He is a data savvy leader, and a true believer of people first philosophy. Currently, he runs an eCommerce strategy and Analytics consulting company, along with a LegalTech venture in India – www.LegalWiz.in