To stay afloat, small businesses must ensure that their revenues far exceed their expenses. However, that is often challenging, especially for businesses that have been in existence for some time. The good news is that there are numerous strategies that small business owners can use to increase their revenues.
These strategies can be classified into strategies that boost sales and marketing efforts, pricing strategies, strategies that focus on customers and strategies that focus on market expansion. We are going to break these strategies down so small business owners can see how they can implement them in their businesses.
Encouraging Repeat Business
When growing a business, it is always advisable to try to gain as many new customers as possible. These are the customers who will provide your business the revenue it needs to get off the ground. However, once you are past this stage, it gets increasingly difficult and more expensive to attract new customers. Instead of spending lots of resources trying to attract new customers, businesses can boost their revenues by selling to existing customers.
It is also important to remember that business relationships are built on trust, and those who have already bought from you trust your business. This means they would be more willing to do business with you than new customers would.
Gaining repeat business can be done through retargeting, encouraging existing customers to join your email list(s) or running new campaigns that target existing customers. Remember that staying in touch with existing customers and constantly communicating with them can work well to persuade them to do business with you again.
Use Coupons and Discounts
Encouraging the use of coupons and having discounts on select products might make it seem like you will be losing money. While it is true that your revenue might fall in the short-term, coupons and discounts encourage future sales. This is especially true where you are able to retarget existing customers.
Coupons and discounts also increase the volume of products and services purchases, especially if you are strategic about it. You could offer discounts if a customer purchases a set number of products or spends a certain amount on your website or shop. Another tangential incentive is free shipping on a set number of products or dollar amount spent.
Coupons are especially effective at encouraging new customers to buy from you. Once they make that initial purchase, you can then use other strategies to turn them into repeat customers.
Change Your Operating Procedures
Instead of selling only one product, incorporate procedures that encourage cross-selling. This is where you promote a complementary product and service which usually translates into a customer spending a lot more money on your website or store. You can see examples of these on some of the biggest online retailers where they suggest complementary products to go with the products a customer has already added to their cart.
Instead of changing procedures or implementing new ones to increase revenues, businesses can also change their operating procedures to cut costs. This can be done through streamlining business practices, processes and procedures, auditing administrative functions, or even outsourcing certain services instead of hiring a specialist full-time.
Take Advantage of Data Analytics
Businesses now collect more data than ever before. This data is not only for reaching out to customers as it can be used in a variety of ways to increase revenues. The first way is understanding customers and what makes them tick. For a business to increase the chances that someone will purchase a product, it must be able to tell the motivations behind a purchase and understand specific customer behavior. Once a business does this, it can segment its customers and then implement targeted marketing campaigns that target different customer segments. Additionally, businesses can tailor specific sales and discounts on products they know certain customer demographics would be interested in.
The second way businesses can use data analytics to increase revenues is through trends and predictions. Forecasting is very important for businesses that want to have the exact product customers need when demand starts surging. Businesses can use data analytics to collect data on and analyze the latest trends to know what customers will likely buy in the future. Businesses can also use the same data to drive marketing campaigns for the products customers mention a lot online and on social media.
Data analytics can also be used in the development of new products and services. By collecting data on what customers are asking about or customer pain points, businesses can understand which products, services, and solutions would help fulfill these needs and help with the pain points customers have.
By addressing specific customer concerns and needs, businesses can become the go-to providers of these products and services, and focusing on specific areas and niches like this is a great way to boost revenue. This guide on driving revenue through data analytics by Emerson College explains in much more detail how data analytics can be used to help businesses carve out a niche in markets that might seem saturated.
Enhance Your Marketing Efforts
Marketing is arguably the best way to boost your revenue. Businesses can use data analysis as discussed above to come up with better, highly targeted marketing strategies. Once these strategies are in place, businesses can reach out to customers more often or even reach out to them wherever they are found.
It is also important for businesses to take advantage of the various digital marketing strategies available to them. These include content marketing, social media marketing, email marketing, and others. Businesses should also analyze data from the past to see where their marketing efforts are working and where they are falling short of the expected return on investment. This allows businesses to know where to focus their efforts and what to eliminate to achieve more desirable marketing results.
In some cases, businesses might not have the time or resources to do all of this. Outsourcing your marketing helps businesses get a professional involved. The professional can analyze your current marketing strategies and advise you on the best way to move forward, or tweak these strategies to help you get the best out of your efforts.
Hiring a marketing professional also frees up more time to focus on other areas of the business, including those that help increase revenues in other ways and areas. Unless you’re a marketing expert, you probably require the services of certain marketers to boost your marketing campaigns which can translate to high revenues over time.
Tweak Your Pricing Strategy
Pricing is one of the most important factors in purchase decision-making. Because many people decide whether to buy a product based on its price, tweaking your pricing strategy can have a significant impact on your revenue.
When tweaking your pricing strategy, the first thing you need to do is to find out the optimal price for your goods and services. This will be dictated by internal and external factors. Internal factors include all costs associated with creating the product, while external factors will include things like demand and supply, and how your competition prices its products.
Because your competitors are likely to be incurring the same internal costs as you, it is always better to focus on their pricing strategy to see how you can undermine them and sell to both their customers and yours. A small price decrease might make it seem like you will be losing money. However, it also means that you will sell more and end up making up for the small price decrease and increasing your revenue in the long run.
The second way to achieve an optimum price is to find a mix of products and services that customers would want. For example, you can optimize the cost of two products that when bought alone would cost more than it would cost to buy them together. This provides extra value to customers and leads to you selling more volume of products you might not have sold otherwise.
Moreover, if you’re looking for a perfect pricing strategy that can help boost revenue, then you may consider adding Goods and Services Tax (GST) to your sales price. Typically, GST refers to a value-added tax on the supply of goods and services from the businesses to the consumers. It’s imposed on the business owners who pass the obligation to the consumers who ultimately pay it as part of the sales price of the goods or services purchased.
As a small business owner, paying GST can be beneficial to your business. For instance, one of the benefits of GST is the elimination of several indirect taxes, such as sales tax, excise tax, and other related tax obligations. Instead of paying multiple hefty taxes, you can save money and improve your revenue efficiency with GST. Hence, if you’re running a small business, you can use this GST calculator or other options online to determine your goods or services’ sales price after adding or subtracting GST.
Sell Add-on Services
In addition to cross-selling products, businesses should also consider selling add-on services to boost revenues. This is usually helpful in cases where the business sells products that need some work to make them work or fit. For example, a business selling kitchen cabinets can sell add-on installation services at a lower cost than a contractor would charge. You will also notice that a lot of computer and smartphone retailers sell add-ons services such as screen protection and extended warranties. All of these are extra sources of revenue, especially in cases where the warranties are not redeemed.
Take Advantage of Ecommerce
Ecommerce is growing at a rate of about 23% every year. Additionally, about 51% of people in the West prefer to shop online. This means there is a huge untapped revenue potential for businesses that do not have an ecommerce presence, which is 46% of businesses in the West according to recent studies.
Moving to an ecommerce platform, or even integrating it into your existing sales channels, is a great way to sell to people that would never visit your physical shop.
Having an ecommerce shop also means that you can use it as an anchor for your digital marketing efforts. Remember that your online shop is just a website that sells products and services and so it can host blogs for content marketing, landing pages for product announcements and lead generation as well as video content pages for video content marketing.
Lease What You are Not Using
Many small businesses have equipment and tools that they are not using. They may need to use this equipment and tools later, but while they are not using them, they can be a source of revenue. There are lots of businesses that do not find purchasing equipment to be a feasible business option, and so would consider leasing equipment and everything else they need from businesses that they need.
To boost their revenues further, businesses can also lease any extra office space they need. This is especially true for small businesses that might have some of their employees working remotely and who do not need any office space.
Turn Everyone into a Salesperson
Every employee has an opportunity to increase business revenues. They can engage in sales revenue-generating behavior any time they write an email or network outside the business. Everyone can pitch in by talking about the business and its products and services any time they engage someone from outside the business.
To ensure employees are effective salespeople, businesses can offer incentives for employees who bring in the most revenue. Generally, workers who are rewarded for excellent work performance can become more motivated in doing their jobs, thereby increasing the overall productivity level of the small business and eventually the revenues. Also, by getting employees engaged and invested in an outcome like this, businesses can be well on their way to boosting their revenues significantly.
Streamline Back-office Operations
There is so much revenue lost due to poor managerial practices. Issues like overhead costs, customer lead acquisition, debts, and more that have a significant impact on revenues can go unattended, especially in small businesses where it is easier to do so.
If there is not enough manpower to handle these managerial tasks, it is always best to automate these tasks. This involves creating systems where employers can add and access data, and keep all information updated and synchronized. This way, it is easier to manage revenues and costs. By automating these processes, a business is also able to run a lot smoother and allows small businesses with a few employees to achieve a lot.
Differentiate Yourself from Your Competition
In a saturated market, the best way to find new customers and therefore increase revenue is by taking customers away from your competition. To do this successfully, you must find areas where you stand out from your competition and let their customers know. You may have better prices, a diversified array of services, better services, or even better customer service.
The key here is to find a differentiator and then reach out to your competitor’s customers. You can do this online through your competitor’s social media channels, or by reaching out to any customers who ask a question or complain about something.
Increasing your revenues requires that you find areas in your business that you can leverage. You also need to find areas where you can streamline different processes to increase your revenue. Do not forget that your customers, the market, and your products and services are key to increasing your revenue.
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