Why are we in business? For most of us, it is to provide a solution to our customers/clients. For others it is to make a difference in the lives of our customer/clients. Whatever your reason is, we need to do this and have enough money cover our business expenses and pay our personal bills.
So how can we run a profitable business? Well, a simple answer is we can increase our income or decrease our expenses. We can also do specific things that can increase our cash flow. In this article, I want to stick to income ideas.
Here are 5 things you can do to increase income and profits:
- Offer new services or products
- Upsell additional services/products to current clients
- Know your revenue mix gross income
- Dig deeper into knowing the revenue mix profits
- Ask Questions so you can make changes in your business
Offer New Services:
If you want to improve your cash flow and build your business, think of adding additional service offerings to yourcustomers/clients. You can do this without much additional effort. What do you provide to your clients repeatedly? Think of creating a product to sell that can help provide a solution for those clients. It can be a recorded webinar with valuable information. It can be a series of 1 minute videos you can record yourself. It can be articles you have already written and turning it into a book. There are endless ideas that can provide income without having to clone yourself to get the work done.
Upsell Services:
Another important idea to increase profits is to make sure your current clients know ALL the services you provide. Have a conversation with them and check in. See how things are going. If there is a need, find out what keeps them awake at night or is frustrating. Maybe your company has the solution. Your customer/client already knows and likes you…they need to knowwhat other ways you can help them. Having current clients purchase additional services and products from you is a great way to increase income without having to come up with new marketing ideas.
Know your revenue mix:
While it is good to have a variety of services to offer, business owners/managers must look closely at the income that each service/product is generating. And, while it is important to know how much income each service is generating, it is more important to know the profits that each revenue offering is producing. Here is an example: I offer three different services: Taxes, Bookkeeping and Payroll. Pretend that my gross income looks like this:
Taxes = $500,000 or 66% of the total
Bookkeeping = $200,000 or 26% of the total.
Payroll = $50,000 or 6% of the total
Total Gross Income = $750,000
Dig Deeper to know profits:
These numbers are great, but what really matters is the profits that are coming from each revenue mix. Pretend that my profits are:
Taxes = $350,000 in profits = 70% profits
Bookkeeping = $125,000 in profits = 62% profits
Payroll = $5000 in profits = 10% profits
Asking Questions:
When you look at your revenue mix, you need to be asking questions like: “What if I don’t take on any new bookkeeping clients and focus on tax preparation so that my profits will be 8% more?”
“If I do that, will I lose some of my tax clients because they like the ‘one stop shop’ of having books and taxes done in one place?”
“Why am I putting energy into payroll, which has many clients paying a small amount with only a 10% profit and the risks are very high?”
“Should I discontinue my lowest profitable service offering?”
“What if I increase my margin on payroll to improve the profits – should I keep that service if I can do that?”
“What if I increase the number of payroll clients, will my margins increase too?”
“What if I…” what do you need to ask yourself?
Your strategy for a more optimum revenue mix might be to sell as much of Service X as possible, while eliminating or fixing the problem around Service Y.
Besides considering profits, there are many more questions to ask. Maybe you would rather help a customer/client on revenue mix X, than revenue mix Y. What service brings you more joy or fulfillment? Or, maybe revenue mix Z will soon be obsolete in the marketplace and you need to find another solution. Take the time to quietly look at your products and services. Be honest with yourself. Now is the time to make changes in your business today so that you can start seeing results!
