Small Shifts Big Results for Small Business
- Negociate Credit Solutions - Lauren Heekes
- Jul 9, 2021
- 8 min read
Sometimes the smallest shift in a business can create the biggest results. Regardless of the current size of your business, it's best to plan and structure your business in a way that will prepare it for the future. When it comes to growing a small business, being proactive will pay off in the long run.
Here are some ideas where making one small change can shift the profitability of your small business:
Business Income
1. Invest in your customer service
Customer service often takes a backseat in terms of strategy. Respond to questions or concerns quickly. If customers have only negative things to say about your business, do whatever it takes to make it right. It’s expensive to have a disgruntled ex-customer. Make your customers feel like they matter to you. If they don’t matter to you, you won’t matter to them when the time comes for support and loyalty.
2. Increase the average size of orders
Customers who already spend money in your business could be convinced to spend more money and are one of the best sources of additional income. Consider cross-promoting other products or services to increase their average ticket size. E.g. A customer buying crockery may be interested in new cutlery or utensils or other kitchenware.
3. Add new products or services
Ask current customers what types of additional products or services they would like to see to make their shopping experience convenient. Research suggestions before diving into any new product or service. One important question may be to investigate what kind of profit margins the new addition will create.
Business Expenditure
1. Outsource, outsource, outsource.
Employees are essential, but employee costs like salaries, telecommunication, user license fees and office rental can be the biggest chunk of a small business's budget. Keep full-time staff to a minimum and outsource work to independent contractors.
2. Negotiate with vendors.
What you are currently paying your vendors, does not necessarily mean you have to continue paying that. Especially in this current economic climate. Vendors are also dealing with a tough economy and also want to stay in business. Many are often willing to negotiate lower prices rather than lose a regular customer.
3. Live in the cloud.
Avoid the cost of expensive hardware and use cloud-based services to host data. Make sure though that the service provider you use is POPI compliant. GDRP compliance will also be sufficient if you are using and internally based product and is the international version of the POPIA Act.
4. Go green to save green.
Going green is not only a great public relations tactic, it's also a smart financial move. For example, keep equipment on a power override system which switches non-essential equipment off when not in use. Consider a paperless environment to reduce paper waste and cost.
5. Cut down on maintenance.
Review ongoing maintenance costs such as cleaning services (Except during the lock down), and cutting back wherever possible. Get employees involved in cleaning their own work spaces. A cleaning service can come in weekly instead of daily. Save money without eliminating the service completely.
6. Buy in bulk.
Shop the cheapest deals on office supplies or research online suppliers to save money on both the product and shipping costs. Consider buying in bulk as long as it is not affecting cash flow in a month and actually benefits your business financially in the long run.
7. Review all expenses, even the little ones.
Many small businesses only really review expenses when tough economic times force them into it. Saving on expenses in a good economic climate means that you’ll have savings to weather tough economic times. Small cuts in ongoing expenses can add up to large savings over the long-term.
8. Find a cheaper way.
Turn your business into a lean, profit-making machine. Research better and cheaper ways of running your business. New ideas and innovations pop up every day and can really benefit the bottom line when it comes to a small business.
Advertising Costs
1. Traditional Advertising
Cut traditional advertising in favour of low-cost alternatives. This is a popular move for small businesses and thanks to the many options in Internet marketing and advertising, it's possible to cut traditional advertising costs and still reach customers.
2. Improve your homepage
96% of visitors to your website aren’t ready to buy something. Your homepage is most likely where they’ll land. Customers will go elsewhere if your home page is hard to navigate. A simple change can boost revenue tremendously. Improve call-to-action strategies so that your homepage delivers more leads.
3. Practice Guerilla Marketing.
Guerrilla marketing relies on personal interaction, has a smaller budget, and focuses on getting the word out in a particular location rather than through widespread media campaigns. Guerrilla marketing uses novel or unconventional methods in order to boost sales or attract interest in a brand or business.
4. Go Old School.
We live in an automated online world. However, customers really appreciate some personal old school individual attention. Market research has indicated that this personalised tactic alone can increase sales. Loyalty and customer satisfaction can generate significant word of mouth business and a happy customer will keep coming back.
5. Get sponsors for events.
Engage new and old customers with great events. Get sponsors that will help carry the expense of an event. It's a good trade for the small business hosting the event and the sponsor paying for some of the expenses, especially if the 2 businesses complement each other in terms of service and product.
6. Know your customer.
Find out which online platforms your customers use. If you know your customers well enough, then you can focus your online marketing efforts where they spend their time online, instead of spreading your resources out over many online platforms. Focusing in the right areas means that you will get a better response and also spend less money on online advertising.
Office Expenses
1. Negotiate with your landlord.
If you are experiencing a profit loss due to various circumstances like COVID-19, consider renegotiating your lease to save on costs. By doing so you may save on one of your biggest business expenses.
2. Consider Virtual Offices
Virtual office solutions help small businesses reduce the ongoing operating costs that come with renting office space. If you're not able to convert your entire staff compliment to a telecommuting situation, find a way to convert at least some of them.
3. Use open source software.
Before you spend thousands on software solutions or updates, research free open source alternatives. You can find open source software for all your business needs.
Employee Expenses
1. Cut employee expenses, not employees.
COVID-19 is forcing businesses to rethink their expenditures. While neither a company or an employee wants to give up a perk that they previously received, it is a better choice financially to keep employees working rather than retrenching them because expenses are too high.
2. Hire smart, inexperienced people.
Experience costs money. Next time you place an advert for a position in your company, try excluding experience as a criteria and interview newly graduated students. Newly graduated students are generally eager to work and also come with the added benefit of being up to date with the latest technology.
3. Cut down on employee time.
Do an assessment of your business. Is it necessary for your employees to work 08:00-17:00 five days a week? Are your employees taking regular coffee and smoke breaks? Are they on social media in down time? Consider reducing a work week to four days. A four-day work week means increased savings in utility and operating costs, as well as a lower salary cost for the business as a whole.
4. Keep your meetings lean.
During the next meeting you attend, add up the hourly cost of every person in the room. Then imagine that you're writing a cheque for that meeting. Any meeting that won't directly generate revenue or cost savings, either in the form of a key decision or a concrete plan of action, is a waste of money.
5. Get rid of frequent meetings
A meeting agenda should never include the words "information," "recap," "review," or "discussion. The only reason for meeting should be for the group to make a final decision. The rest can be down collaboratively via email.
6. Reward your profit-makers.
This applies to employees and customers. Give vouchers or discounts to customers that support you. Get to know your employees and give them tickets to fun events or outings to boost employee morale. You can also offer incentives to employees who meet certain requirements.
Partnerships
1. Think beyond the cash box.
When that cash supply gets low, as it tends to do in small businesses, don't close the door on getting what you need. Offer your services in exchange for work done by another company.
2. Save on shipping.
Constantly compare prices on shipping, negotiate better terms, and makes sure that you are using the most cost-effective way to deliver goods. Service quality should also form part of this decision.
3. Create partnerships for marketing.
Consider advertising with businesses that will enhance each other and reduce advertising costs. An example of this is a bridal boutique, bridal venue, florist and bridal photographer. Combining costs may put you in a position to afford better advertising that was previously too expensive as an individual business.
4. Simplify your distribution process.
If possible consider eliminating warehousing and ship directly to consumers. Discuss this option with suppliers i.e. if you send them more business then they may consider shipping directly as they are making more money.
Other Ideas
1. Clarity on charity.
Put together a document on charitable criteria. Set financial limits and also who you want to benefit from the money you donate. That way if you do have frequent requests you can supply the charity with your criteria in the form of a written document and then it will be easier to decide on those that qualify.
Building a small business that will recover from any economic downturn is an ongoing experiment. As you build your customer base, pay attention to feedback, gaps in the market, and other indicators to show you what’s missing. Research other business with similar and competing products and figure out ways to make your product or advertising tactic truly unique.
It is going to take a while before we recover from the current economic disaster which is South Africa. However, work hard, do your research, cut costs, hope for the best and prepare for the worst. Good Luck!
Some Small Business Tips and Guides
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About our Author
Lauren is a registered member of the National Credit Regulator. Prior to that, she worked as a Financial and Technical consultant for McGregor-BFA (Now INET-BFA). McGregor-BFA provided Trading and Market related data as well as Investment management software to Asset Managers, University Business Schools and Investment entities. Thereafter experience was advanced to the Property Market working as a Project Manager for Propertyi. But it was her career at the IEB in Adult Education that inspired a passion of hers to educate consumers about responsible ways of managing their financial lives and the long term advantages of doing so. It is her belief that financial education should be taught from an early age. By doing so we can create a country that is economically stable, driven not only by work ethics, but by becoming Financially Independent too.
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