14 Ways to Double Your Profits Now

by Joseph Gelb

Published on this site: November 19th, 2005 - See more articles from this month

In our business experience, we have discovered three (3) principles that can help you channel your efforts to boost your profits:

1. It can be Very tough to find new customers;
   
   
2. Your Existing customers are your Best prospects for new/more business; and
   
   
3. There are only so many hours in a day, so you have to organize your time and focus your energy to be most productive and capture the best/highest potential opportunities.

Implement these 14 Action Steps in Your Business to Boost your Profits:

1. Raise Your Rates/Prices
   
   Price often implies a certain image and quality level. Don't you offer quality? Excellent value for the dollar? As the price of necessities such as food and clothing are rising, when was the last time you raised your prices? Presumably the value of your products and services has increased over the time period, so...
   
   When you raise your rates, you will earn more for your efforts-more money, same time, same effort and same investment. Some of your customers will complain. Be sure you present the value you provide. And, those customers who leave, well good luck to them.
   
   
2. Dismiss Your Worst—Least Productive—Employees
   
   As corny as this may sound, happy people are more productive. And those employees who don't mesh well with your culture, your mission or your team are probably reducing the overall effectiveness of your organization.
   
   Give them a severance package, or write them up and give them three (3) or six (6) months notice to turn around or find a new [more suitable] position. Be alert for negative reaction and a lame duck situation (for example, people who you put on probation and who wait for their termination notice and negatively impact productivity and employee morale).
   
   Offer the empty seat to a go-getter Immediately. You are likely to find several volunteers within your organization. We have found that when non-performers, dissenters, and complainers exit, the remaining team members will feel much better and become much more productive.
   
   
3. Terminate Your Worst Customers, Clients, etc.
   
   Analyze all of your accounts for profitability. 'Worst' could mean least profitable or those who complain the most, demand the most and delay payment. Contact those who you want to increase their business with you. Give them a timeframe and an opportunity to increase their business volume with you, and follow up. If they give you more business, great; if not, Exit.
   
   We recently helped one of our clients do this. Our team analyzed all their accounts and their business (cost structure). We determined that the company spends approximately $45,000 per client every year to administer, maintain, and service each account. We set the minimum annual revenue for each account at a dollar value that's approximately two times (2x) cost.
   
   Then we organized the sales force to call on 48 low volume and dormant accounts. They grew some accounts, decided to reassess some accounts six (6) months later and terminated nine accounts. These steps increased their profitability and productivity, immediately.
   
   
4. Charge and Collect Work Fees and Retainers
   
   Work fees and retainers are up-front (advances) deposits for work to be performed. These fees are useful to cover your overhead. Equally important an advance gains a buy-in and a commitment from the client. In some industries these fees are customary. Retainer agreements should be in writing signed by the customer or client to avoid confusion and a possible attempt to get a refund. Make your Work Fees and Retainers non-refundable.
   
   The key is when a customer pays the work fee, he/she signals a serious commitment to undertake and complete the project. In our experience, those customers who refuse to pay work fees are often the people who are cost likely to walk away from a deal or project in the middle and leave you holding the bag...
   
   
5. Charge Work Fees for Customization
   
   By the way, we now collect deposits for customization work. For example, when we customize our best selling premium '157 Ways to Cut Your Grocery Bill.' Unfortunately, some years back, we customized the publication for a new customer, obtained customer sign off on the proof, and printed the copies. They changed their mind or had financial difficulties, and we got stuck paying the balance of the print bill. No More. As a caveat, it is better to reject a job and than take the job, not get paid, waste your time and lose money.
   
   
6. Request Referrals
   
   Ask your most satisfied (best) customers to recommend you to their colleagues, vendors, suppliers, customers, etc. Request names and contact points. Follow up.
   
   For example, "Joe at XYZ Services encouraged me to call you because he thought you might benefit from our services. He has been working with us for over five years."
   
   
7. Run a Special Promotion or Two
   
   If you are a Small Business Advisor [newsletter] subscriber or a Publishing Gold e-zine member, you know that we make offers and run promotions on our products and services in the news-letter. Every time we do this, we generate new business. Why not give these techniques a try in your business?
   
   Study the publications [trade mags, newsletters, etc.] in your field over several months. Which advertisers run ads and promos again and again? This means their ads must be working (unless the publication requires advertisers to purchase a series of insertions). If your product meshes with the readership, craft a promotion and test it.
   
   
8. Liquidate Your Old Inventory Now
   
   Hey, we all make mistakes. Last year's hot red dress may be this year's iced-cold rag. So it goes.
   
   Your old inventory is not getting any better or more attractive. What's more, inventory takes up warehouse space, requires insurance, administrative time, and mind space.
   
   * Cut your losses, and Liquidate the stuff [aging inventory] ASAP.
   
   * Offer the old stuff at a reduced price to your customers who make another purchase.
   
   * Sell the dead weight at auction or to a liquidator or wholesaler.
   
   * Donate the unwanted items to a worthy charity.
   
   
9. Charge for Out-of-Pocket Costs and Expenses
   
   Many service businesses charge for photocopies, long distance telephone charges, Overnight deliveries, fax charges, postage, meals for late work, travel and lodging costs and expenses, etc.
   
   You may be able to add these charges to your roster of fees and expenses. Some companies even add a 10% surcharge to the out-of-pocket costs and expenses. Collecting this money can significantly increase your bottom line.
   
   
10. Collect Your Accounts Receivable
    
    Many customers will gladly sit tight and stretch out the time it takes to pay you, when you let them. While collection is an art and you don't want to lose customers, every day you don't collect money costs you money in terms of working capital. Keep track of your accounts receivable and push your customers to pay their bills on time.
    
    
11. Organize - Analyze What's Working / What's Not
    
    We all get tunnel vision from time to time and often keep doing what we've been doing. Maybe it's habit, maybe life becomes comfortable. Step back. Take a look at what's working, what's profitable, what's not working, what's costing you money, and how you can improve. Get buy-in and develop an implementation plan.
    
    
12. Hold a 'Focus Group' and/or Conduct a Survey
    
    Organize a focus group, or maybe two sessions; include your best customers and your least satisfied customers. Offer a prize or bonus to encourage participation. Ask them why they like doing business with you and why they don't. Ask what you can do to improve...
    
    
13. Read Your Customer Feedback / Letters / Complaint Forms
    
    This material is a veritable goldmine for you and your organization. What better way to improve than to learn what your customers dislike about your products, service, etc.? Answer every last piece of correspondence, and re-tool your programs. You'll be amazed at the positive results.
    
    While it can be Very difficult to land new customers, your existing customer base provides a goldmine of new opportunities and profits. Wield the pick axe today!
    
    
14. Upsell Vigorously
    
    * Upsell means to increase the order size or the purchase frequency.
    
    * To discover more unbeatable upselling techniques and strategies, obtain Publishing Gold's special report: 'Unbeatable Upselling Techniques.'[Send US $10.00, per copy, postpaid, to PublishingGold.com, Inc., PO Box 758, Armonk, NY 10504-0758 USA. International members please add additional $4.00 for extra postage.]

To unlock the profit-making opportunities that are hidden in your business and implement the strategies and ideas featured in this special report, e-mail Joseph Gelb at [email protected]

Joseph Gelb is a CPA and Attorney at Law. He specializes in small business growth and development. Author of, "How to Start a Million Dollar Service Business" and "Tax Accounting for Small Business," Mr. Gelb can be reached at T: 1-516-374-1387; F: 516-374-1175. Ordering info: PO Box 436, Woodmere, NY 11598-0436 USA. http://www.SmallBusinessAdvice.com