Guide To Doubling your Profitability
Your business is viable if you are generating positive cash flow to manage its annual operations. The more surplus cash flow, the better it is for your business because you can sustain your daily operations, even with the inherent uncertainties in business. A positive cash flow is also an indicator that your business is growing. But, if you have inadequate cash flow it means that there is something wrong with your business strategy.
While loans can help you, it is not the ultimate solution. That is why we came up with practical tips on how you can use the proceeds of your low doc loans to double your profitability and grow your business:
- Boost your sales.
A decline in your sales figure means that there is a decrease in your profits too. When a new competitor is in the market and it offers better products or services or makes it more accessible or marketable to your customer base, it can lead to a huge decline in sales which causes as serious problem in your cash flow.
One of the main reasons is the fact that overhead costs usually remain the same. For example, if you are spending $100,000 on operating expenses each month to produce 100,000 gadgets; your overhead cost is the same regardless of the amount of items you sold. It doesn’t matter if you are able to sell 100,000 or 10 pieces. while the cost of production will vary, because you will not produce that same amount in the succeeding month until you sold the remaining gadgets, wages, utilities and other costs will be the same, regardless of production and sales.
Here are some tips to improve your sales this year:
- Give free e-books and other digital products as a bonus for every purchase. It can be as simple as a how-to guide in using the product you are selling or tips which are related to your business. For example, if you are selling cooking wares, you can write a recipe e-book or tips on how to take care of your kitchen utensils. You can distribute E-books and pdf files for free. You can send it to their email upon completion of the sale.
- Provide unique product packages depending on the upcoming seasons or community events, target group’s unique needs and how these products would complement each other. Product packages offer great customization opportunities to make your customers feel that you know their needs. It also helps you sell those products which are not very popular to customers, simply by including them in the group package.
- Offer free shipping or shipping discounts for bulk orders especially for people within 5-km radius of your business location.
- Improve your social media marketing strategy. People are online most of these days. Just choose a good social media manager who will find clients to try your products or services. Or, you can do it yourself. Sending Facebook messages to your contacts and posting about your latest product offerings on your timeline can increase your sales if you choose the right visual and text content and make it visible to your target market.
- Don’t undercharge
Be confident with your pricing. If you are spending $10 for a sticker and sell it for $12, how much will you earn, if you deduct the taxes, marketing and selling costs?
Price your products right by following the tips below:
- Align your pricing to your customers’ capacity to buy. If your target market are high-income earners, then it is alright to make it a little bit pricey than the products you would offer to low-income earners. But, make sure that the quality is something that you can brag about.
- Make sure that your pricing covers the cost and the profit as well. if you are selling online, you can include a pricing calculator button to help them compute the shipping cost and other charges aside from the selling price of your products.
- Set a profit-based sales target and align it with your marketing and sales objectives, especially if you have a strong competitor to beat and your cash flow is not good. It will help you boost your profit-generating efforts so that the sales will not only cover the company’s fixed costs but other fees needed to meet your profit targets.
- Revise your debt expenditure model. Use debts wisely.
How much does your company spend on debt each year? If you are obtaining loans to increase your working capital, make sure that the interests are not using up a huge portion of your net income. Also, make it a point to use your debts to finance profit-generating projects or those which are directly related to it. You don’t have to apply for high-interest bad credit loans when you have an option in the form of low doc loans.