Be Creative to Improve Profits over the Long Haul

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In a volatile economy, businesses that fail to think strategically and creatively will quickly find themselves at a competitive disadvantage. Management needs to assess the particular business environment as well as the strengths and weaknesses of the business in order to best use the tools available to improve the bottom line. Of course, all managers know that it’s imperative to increase sales and decrease expenses to stay financially solvent. But the devil is in the details.

Sales Strategies

Every business seeks strategies that will help it better position itself to sell more to current markets and expand to new markets. For example, one cost-effective strategy is to work more closely with current customers by strengthening and expanding those relationships. After all, they presumably are satisfied with the products and services they’re currently receiving so they’re likely to be willing to try others. Ask about their needs, listen to their responses and identify ways the company can address them.

Another strategy is to partner with other sellers. A company that isn’t in a position to produce complementary products or services can look into partnering with a firm that has the capacity to do so. Another way to enlarge a company’s potential market is to seek out distributors, wholesalers or other agents in a strong position to sell its products.

In addition, it’s important to leverage social media. It can be a cost-effective way to highlight specific products or services, often with a relatively nominal investment of time. Of course, social media promotions have to be handled carefully — customers may be turned off by a barrage of posts that basically shout, “Buy this!”

Many experts recommend alternating posts that focus on specific products with those providing information of value to followers and fans. For example, a cybersecurity firm might offer guidelines on keeping information safe online.

Finally, while increasing prices may boost revenue, scattershot price jumps can prompt customers to go elsewhere. But it’s possible to design a pricing strategy that boosts revenue without simply slapping on higher price tags.

One option is to bundle products or services and then offer the bundle at a price lower than what customers would spend for each item individually. Customers enjoy saving and the company boosts sales, often with minimal additional sales effort.

Another way might be to offer a subscription service. Customers ensure steady access to the products or services they need, while the company gains an ongoing source of income.

Cost Strategies

Several tactics can help businesses rein in costs, including identifying top suppliers. Many companies find that just a few of their suppliers account for most of their spending. By identifying these vendors and consolidating spending with them, they can be in a stronger position to negotiate volume discounts. Similarly, some industry associations offer bulk purchasing prices. Consolidating a supplier base also often streamlines the administrative work associated with purchasing.

Going green can save money as well as the environment. Refurbished computers or office furniture often can be found at substantial savings compared with their brand-new counterparts. Once a business no longer has a use for a device or piece of office furniture, it might be able to make a few dollars selling it to liquidators, dealers or others. In addition, rather than run heating or cooling 24/7, a business can use timers to turn off the HVAC system at the end of each workday, turning it on shortly before the next business day begins.

Another tactic is to consider whether to outsource services or deploy technology. It can be tempting to try to save money by doing everything internally, from updating the company’s website, to processing payroll. Taking on projects the company isn’t equipped to do diverts time and energy from the initiatives that differentiate it from competitors. Similarly, wise use of technology, such as accounting applications or CRM solutions, can free up time, provide valuable information and reduce errors.

Survive — and Thrive

To navigate these uncertain times, businesses need to stay ahead of the game by continually evaluating their operations and seeking ways to improve them. Strategic thinking about increasing sales and reducing costs can give your business an edge and ensure it not only survives, but thrives.

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