There are tons of books and even more trainings that promise to answer the most important question of any entrepreneur - how to increase the profitability of a business. Not all of the advice of even the most experienced businessmen is universal. Therefore, you should not look for a panacea or a recipe that will solve all problems with profitability, as if by magic. However, it will not be superfluous to take a few tips into service for many businessmen, especially beginners.
Unprofitableness of the enterprise or work "to zero" quickly get bored and when the first signs of negative profitability appear, the entrepreneur thinks about closing his brainchild. Business analysts say that more than 85% of small and medium-sized businesses do this in their first year of existence. At the same time, statistics show that often the reason for the lack of profit is the notorious mistakes of the businessmen and entrepreneurs themselves.
A mistake in business planning can be costly. If the author of the material is the entrepreneur himself, then most often all costs are taken with a big takeoff. At the same time, the underestimation of the estimated costs is no less harmful than the overestimation. Having planned for one degree of expenditure an amount that significantly exceeds reality, the entrepreneur retains these funds that he needs in the other direction. For example, planning to launch a massive marketing campaign after a certain time, the manager can lay down an amount at inflated rates, while funds for current needs, for example, payroll, can be raised from the funds set aside for renting premises.
Answering the question of how to increase the profitability of a business, analysts often try to tune the entrepreneur to constantly revise previously made decisions, including financial ones.
The second common mistake of novice businessmen lies in the unjustified understatement of prices for their services or goods. In an effort to demonstrate a democratic approach to pricing, entrepreneurs often forget about turnover, which has only an indirect relationship with pricing policy. In addition, lowering prices without the corresponding costs of marketing promotion can nullify all efforts of the enterprise. If the advertisement was nevertheless given and provoked an increase in the consumer flow, then its subsequent decrease may be due to the reaction of competitors who took the same step.
The third step that an entrepreneur must take in the struggle to increase the profitability of the business is to consider labor productivity. The level of qualifications of personnel, their skills and interest in increasing the turnover of the enterprise play a decisive role in the fate of the business. The simplest motivation for employees is financial incentives. Waiters will be more welcoming and helpful if they know they can tip themselves, sellers will recommend more items for purchase if they are paid a percentage of the proceeds.
An additional way to motivate employees can be constant financial growth and an internal system for determining the best employees. These are "Boards of Honor" for the best employees of the month, and bonuses for outstanding employees, as well as pleasant gifts for the holidays.
And, perhaps, the most important misconception that becomes a stumbling block to business growth is the lack of advertising. Of course, a successful product does not need promotion, but even the most profitable enterprise sooner or later faces a situation when, due to the marketing activity of competitors, the consumer forgets the yesterday's favorite. In this case, of course, the work on marketing promotion becomes one of the main ones, but a competent approach is also needed here, since good advertising is the one that brought 100 from the invested ruble.
