1. Increase employee productivity
Increasing productivity is key to a successful business. The main reason for this is you will be able to increase efficiency in the workplace and therefore increase your output without having to hire more employees. Fewer employees, producing a higher output reduces variable costs so that you are more profitable per sale. This gives you a competitive advantage by increasing your profitability or allowing you to reduce the price of your product/service but still maintaining a similar profit margin. Reducing the price of your product/service would most likely increase the number of sales but this depends on your elasticity of demand. The elasticity of demand is effectively how supply and demand for a product change when its price changes.
You may ask, how can you increase productivity? Productivity is at its finest when staff are motivated and happy. Although, each workplace will be different so you will need to figure out what motivates your staff. Is it a financial bonus, early finishes, or qualifications to better themselves?
Frederick Herzberg came up with a theory of motivators and demotivators. Effectively, he believes many factors will demotivate staff such as a clean office that will demotivate you if it wasn’t clean but wouldn’t motivate you further if it was clean. Then many factors will motivate staff such as financial bonuses.
Firstly, you should be making sure there aren’t any factors that are going to demotivate staff. Make sure that the office is clean, make sure that their equipment up to standard, and there are nice, clean facilities such as kitchens and bathrooms. Once you have made sure there aren’t any demotivators, you need to prove to your staff that they are important to the business. Staff parties, achievement certificates and opportunities to grow are just a few ways the business can go above and beyond to motivate its staff.
Finally, you must offer your employees a suitable contract. Make sure there is a suitable wage available for your employees with a sufficient amount of holiday days and competitive bonuses for achieving targets. I believe this will rapidly motivate your staff and increase productivity in the workplace.
2. Reducing costs
Reducing your costs will increase your profit margin. There are two types of costs to a business: fixed costs and variable costs. A fixed cost is a cost that does not change with an increase or decrease in goods or services sold. Examples of fixed costs include rental payments, salaries, insurance, and utility bills. Variable costs are costs that change in relation to how much a company produces or sells. They will increase or decrease depending on the business’ production or sales levels.
One of the greatest ways to reduce costs is by reducing the amount of waste. Waste comes in many forms and will heavily depend on your area of business. If you were a retailer, waste reduction can come from stock rotation making sure the nearest sell-by date is at the front, so the amount of food thrown away is at a minimum. If you were a small online business, waste could be the number of subscriptions, the business is subscribed to. Therefore, reducing waste means analysing which subscriptions are key to you being successful and unsubscribing from the rest.
Other key cost areas need analysing such as your suppliers which will impact your variable costs. You need to ask the question; are you getting the best deal for your business? If the answer is no then you need to speak to your suppliers to achieve a better deal or look for alternatives to see if there is a way to maintain a similar quality, lower-priced deal. If you can achieve this, it will reduce the variable costs dramatically.
Similarly, you need to reduce the price of your fixed costs. One of the easiest ways to do this is by looking at alternatives for your utility bills, insurance, and potentially a new business location if it will reduce rental payments.
3. Streamline your business to increase profit.
Streamlining your business refers to the improvement of the efficiency of a certain process within an organization. It can be done by automation, simplification of tasks, or elimination of unnecessary steps using modern techniques and technology.
No matter the size of your business there are always ways to streamline. I believe there should be a thorough review at least once every 3 months in each department to see if there are ways to make the business more efficient and maximise ways to increase profit.
Automation is one of the easiest ways to streamline your business. In 21st century business, there is so much software to help streamline and automate your business. One example is analytics software that provides all data, graphs, and analysis in one place. There are many examples including Sprout Social and Buffer analytics that provide extensive data in one place which significantly reduces the time and people necessary to create your reports. This speeds up the time needed to create reports and allows you to use your employees in other departments to make other processes more efficient too. However, you mustn’t automate too much as becoming over-reliant on technology can create issues if any of the software is down or the internet is down for example. Therefore, you should always have a contingency plan.
4. Use social media to effectively market your products/services
Social Media Marketing is a great tool for marketing your products/services, no matter your sector. Social media marketing is the use of social media platforms to connect with your audience to build your brand, increase profit, and drive website traffic. This involves publishing great content on your social media profiles, listening to and engaging your followers, analysing your results, and running social media advertisements.
Firstly, you need to analyse whom you would like to target with your social media strategy. This is going to directly influence what sites you are going to target and the sort of content you are going to post. This is more important if you are a smaller business and have less time to designate each week. If you are looking for B2B (Business to Business), LinkedIn would be the best platform to use as it allows you to contact other businesses. However, if you were looking for B2C (Business to Consumers) there are other sites like Facebook, Instagram, and Twitter that would be more fruitful. Similarly, Tiktok is the fastest growing social media platform, so it is important to target younger consumers through this site.
How does social media marketing increase profit? It allows you to organically scale the growth of your business instead of paying for advertisements such as newspapers, billboards, and television. This directly reduces your variable costs, whilst still marketing effectively, meaning your profit margins are increased.
5. Using tenders will increase profit
Tenders can take your business to the next level and increase your profit. Tendering usually refers to the process whereby governments and financial institutions invite bids for large projects that must be submitted within a finite deadline.
This is a great way to find new contacts and business ventures that will give a competitive advantage. One of the greatest advantages of tendering is that it is guaranteed pay it a very complex situation with the current global pandemic because it is in the public sector. Similarly, the government is desperate to help SMEs and is willing to pay £1 in £3 in SMEs, so it is the perfect time to start looking for tender opportunities. Another benefit of tendering is that if you’re successful, it will offer future opportunities and new contacts which is very likely to increase the profitability of your business. Therefore, I would suggest making the most of these opportunities and go find yourself a tender.
If you don’t know where to start looking for a tender, please use our tender finder service or email us at email@example.com. We are also available on LinkedIn if you have any queries or need any advice regarding the rest of the blog!