There are so many ways to increase profits but to start with, here are two quick and easy ways:
1) Increasing Your Prices
Every year costs increase which erodes your all-important margins. Often business owners are worried about putting prices up as they are concerned about losing customers. However the reality is that in most cases when prices are gently increased very few customers, if any, even notice.
But let’s say you increased your prices and a small amount of your customers left - let’s look at the numbers to see if you would be better off or not.
Say you had a Gross Profit Margin of 20% and decide to increase your prices by just 10%. You would have to lose 1/3 of your current sales before your profit fell back to what it was originally before the price increase. Would you lose 1/3 of your sales from a 10% price increase? Probably not.
A cafe business owner I have been working with has increased prices by 5-10% three times over the past 18 months, and their sales and profits just keep on increasing.
Action Point: Increase your prices by between 5-10% next month.
2) Ask your existing customers to buy something extra (Up-selling)
Depending on what business you are in, there are many ways you can do this. For example if you are a men’s clothing store and your customer is about to buy a suit from your store, a smart salesperson, just as the customer is about to pay, might suggest that because they have just purchased a suit if they buy now they qualify for 35% discount off the price of your best ties. Just by having something extra to offer (not necessarily at a discount), your staff can increase your sales with very little effort.
McDonalds have added millions of dollars in sales every year by asking “Would you like fries with that?”. Other classic upsells include - a case with your new iPhone, waterproofing spray with new boots, batteries when purchasing a toy, insurance for plane tickets, extended warranties, a chocolate bar by the checkout. Having already made the decision to buy, the customer is already in “buying mode” and if they are offered a little something extra, they are very likely to go for it.
Action Point: Pick one lower value related product each month that all staff can offer as an upsell or add on when the sale is made.
There are tons of low cost ways to increase profits; try these to get you started.