Whether you are starting a business or working to become financially sound, the fastest way to improve your bottom line is focusing on your top line. Here are five areas to look at;
- Know and serve your ideal customer/client obsessively. Your ideal customer highly values what you sell and is willing and able to pay the highest amount. The Pareto principle indicates that 80% of your profits come from 20% of your customers. Spend time identifying your top 20% customers and focus on their needs. Become a profiler – learn as much as possible about your ideal customer such as how they think, why they buy, what they value the most, how much they earn, their spending habits, what they read, their goals, their values, etc.
- Set your prices to fit your brand, to attract your ideal customer and to earn a profit so you can stay in business. If you have a luxury item – price it like one. If you don’t value it, why will your customer. If you are offering a low price – verify that you are still making a profit on that customer, type of service or product. Spend time learning how to reduce your costs to deliver the low-price product.
- Make it easy to do business with you. Keep the sales process simple for your ideal customer to buy – provide clear action steps, offer terms to make it financially feasible and reduce their risk by offering a guarantee. A money back guarantee provides a new customer the opportunity to back out.
- Work to increase your average sales invoice. Offer your customer three levels – basic, intermediate and advanced. Provide options that meet your target client. Like cable TV they offer sports, history, Disney, etc channels. Offer upsells. McDonalds made this famous with “will you take fries with that” or “do you want to supersize”. Offer a warranty option.
- Stop losing money. The easiest way to increase the bottom line is to stop selling services or products at a loss. It is critical to know how much the business earns on each customer. Verify, with your accounting records, that you are making a profit on each customer. Intimately know what the business earns for service or products that you provide. Not all products provide the same benefit to a business.
- Take an in depth look at what services you are giving away. You may be losing money by giving value away. We are not our best customer. Pay close attention to why your customers work with you. For example, in the tax world, many accountants thought they got paid for preparing the tax return. They gave away the advice. When in fact most clients value the advice more so than the return itself. Listen to your clients – get testimonials.
These steps will help you work smarter and not harder. Personally I have find more satisfaction with my business when I take time to work on it and not just in it.
By Mary Guldan-Lindstrom