One of the major challenges of growing a small business is driving profitability. Balancing the future and immediate needs of the business is tricky. While the need to invest in the former is important, meeting short to mid-term financial goals is paramount too. Fortunately, there are time tested and proven approaches small businesses can apply. They are discussed in this post.
1. Prioritise your most profitable segment
By focusing on your most profitable segment, the returns on investment are likely to be higher. Your profitability inches upwards because the segment is able and willing to pay a higher price for your product or service. Moreover, the effort you have to put in to nurture and grow this segment may be similar, or less, than other segments.
Technology is your greatest ally in driving profits. There is an app or software available out there for almost every business function. All it takes is for you to discover and explore their potential contribution. From cloud-based accounting and marketing to the use of robots, having a strategy to automate business functions is a worthwhile long-term investment.
3. Increase the perceived value of your brand
Your brand is the most powerful tool and asset to elevate the perceived value of your product or service. Why? A purchase decision can be broken into two parts – functional and emotional. The former is the effectiveness of the product or service; the latter is the intangible aspect, that is, brand. It is the feel-good factor small businesses sometimes overlook but consumers desire. When its value is high, you can command a higher price for your product or service.
4. Improve your customer experience
Today, consumers are looking beyond the product or service. They give due consideration to the experience with the business or brand too. Almost 9 in 10 customers don’t mind paying more for a great customer experience*. As you grow the business, pay close attention to customer experience. It marks the difference between a good and great company.
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