4 Underrated Ways For Businesses to Increase Profitability
The most commonly cited strategy for improving profitability is usually adding new customers, but that’s usually not the most straightforward strategy. Earning more customers involves scaling and investing in marketing, and it is also not guaranteed to work.
As you’ll see below, there are plenty of underrated ways to boost the bottom line, and many of these require little upfront investment. In many ways, it just means making a few adjustments and bringing a couple of influential players on board. We’ve put together five methods that have some of the best ROIs in business; incorporate them into your operations, and you should find that the profit line begins to move in the right direction.
Auditing Subscriptions
It’s very easy to acquire a new subscription. It’s less easy to know when it’s time to cancel that subscription. All too often, businesses pay for software and licenses that they no longer need, during which the subscriptions are silently draining money that could otherwise appear on the profit line.
Spending a single afternoon auditing your subscriptions can quickly uncover those that are no longer needed. It’s always worthwhile occasionally checking the market to see if there’s a cheaper — or even free — version of the tools you use.
Working With a Good Accountant
Some businesses only hire an accountant when they’ve grown so big that they can no longer manage their accounting in-house. Smart businesses proactively hire an accountancy firm before it’s essential. The reason? Expert business accountants can unlock savings that really can make a difference to profitability. What’s more, the benefits of hiring an accountant compound over the years. They don’t just identify wasted spending; they also make structural adjustment recommendations that recur each year. Plus, there are also plenty of other benefits to hiring an accountant, such as ensuring that your finances are fully compliant.
Raising Prices
Raising prices is an effective way to increase profitability, yet it remains underused. Many businesses are simply afraid of losing customers.
But actually, the benefits usually outweigh the risks. Most price increases lose fewer customers than the business expects, especially if it’s only a modest increase. What’s more, the increased revenue generated by the price increase is usually more than enough to offset the decrease from the lost customers anyway.
Improving Employee Retention
Hiring replacement employees is expensive, but it also impacts the bottom line in indirect ways. Productivity dips when new employees arrive, knowledge is lost when employees leave, and customers can have a variable experience that opens up the possibility that they’ll move to a competitor.
You can’t force employees to stay, but you can make it less likely that they’ll leave. Improving your employee turnover rate usually comes down to making a few, low-cost adjustments. For example, offering flexible working conditions, investing in employee training and development, and paying competitively. Many businesses are reluctant to give raises, but it’s usually a lot cheaper than having to replace employees — and especially if the departing employees move to a competitor — so it’s worth keeping them on board.
