5 ways to stop your business from losing money
1. Get organised
Time is money, and there’s no bigger drain on your time than being disorganised. By investing a few hours into developing systems and processes for your business, you’ll save substantial time and avoid potentially losing money in the long run.
Ideas include document templates for paperwork, consistent guidelines for subcontractors, spreadsheets to track expenses and a system to capture receipts (even if it’s a different shoebox for each month).
“Automate everything where possible and have clear standard operating procedures (SOPS),” says Anna Jonak, founder of The Elevatory business coaching. “And I’d probably consider outsourcing some tasks depending on how much time they take up. This could be locally or overseas depending on the task.”
2. Provide amazing customer service
Losing customers over time is unavoidable, but losing customers because of poor service is not. Reception and some sales roles can be among the lowest-paid in small businesses, even though the people in these roles are creating and maintaining your business’s relationships with customers. Consider what it’s really worth to have the right people in those roles, and mentor and train those people when you find them.
Pay close attention to the quality of your customer service, from the customers’ own point of view.
“Small business owners need to be constantly surveying their customers for feedback on performance and clarity on what else they might like to see from the business,” says Anna.
Consider what entrepreneur Naomi Simson (you might know her as co-founder of Big Red Group, or as a Shark Tank ’shark’) has been doing since day one of Red Balloon.
“Whenever I crave insight or understanding about why, how, or what the customer is thinking I make some customer calls,” Naomi wrote a couple of years ago. “This works in two ways – the business understands the customer experience, and the customer becomes part of the development of that experience. Whether that is giving product insight and ideas, or providing frank feedback on what they do and don’t like about the business.”
Recordings of your service and sales team members’ customer calls can also be a powerful training tool, enabling you to clearly outline service expectations and facilitating discussions about ways to improve sales skills and customer approaches, with relevant examples.
And don’t lose sight of the importance of customer retention.
“Product-based businesses can consider looking after their current customer base with discounts, loyalty and reward programs, VIP offers, and new launches,” says Anna. “For service-based businesses, think about check-in points, automated emails, releasing new content, referral schemes and a clear ascension model through your programs.”
3. Implement effective marketing
The ability to attract new customers depends largely on the success of your marketing (unless, like Jason He, you’ve absolutely mastered gaining customers via word-of-mouth referrals). A drab website that isn’t optimised for mobile, poor social media management, or splurging on expensive but ineffective advertising can drain resources and even turn off customers.
“Marketing is the lifeblood of most businesses so owners need to take time to plan and understand this area of their business,” says Anna.
Seek professional assistance and use online resources like blogs to learn how marketing can transform your business. Traditional marketing tactics – like loyalty programs and letterbox drops – are very simple to implement, but it’s equally important to get online tactics right, like publishing quality content and having a strong social media presence.
“Business owners also need to be analytics-savvy so they know when their marketing is working and when it’s not. Many will outsource without really understanding their results and this can be very costly.”
So don’t be afraid of your data. It can reveal not just points of weakness but valuable opportunities to improve revenue.
“Whether it’s website analytics, call conversion rates or other marketing metrics, data shows you where improvements can be made with small tweaks leading to big returns,” explains Anna. “For example, taking an ecommerce store conversion rate from 1.5% to 2.5% will make a huge impact and closing 60% of calls versus 50% of calls will drive big rewards.”
Heads up, retailers. Bookmark this guide to increasing cart conversion for four quick wins you’ll be glad to have on your side.
Anna also suggests business owners consider implementing profit maximisers.
“Think about bundles, cross sells, frequently bought together, subscriptions, different layers to your course or program, and free shipping on orders over a certain amount,” Anna suggests.
4. Invest in your staff
Better-qualified staff, employee training or a professional recruitment resource may improve the quality and productivity of your workforce, as well as keeping turnover low. And with the cost of hiring and training new staff potentially being significantly higher than retaining and continually upskilling current employees, keeping that turnover down may save some serious cash (and some painful interview time).
As well as building the practical skills of their team members, business owners and leaders should also invest in their own leadership and abilities.
“Consider getting a good business coach who can help you avoid costly mistakes along the way,” Anna advises.
5. Get the price right
Overcharging for your products or services can drive customers away, while undercharging could drain profits.
Commonly, prices are set based on total cost of sale (including production marketing, sales and all overheads) plus margin or profit, or they may be based on how much the competition charges for similar goods or services. The latter strategy though is not a quick fix – to avoid making a loss on goods and services, you still need to know the total cost of sale to ensure a margin is in place.
Small businesses with good reputations may also consider setting prices that align with the quality of their work. If you provide a better-quality product or service, and you can communicate the value of that quality to your customer base, you may be able to charge more than a competitor.
Whichever pricing strategy you use, avoid guesswork and rushing into setting a price – revisit your pricing regularly and when shipping, material or staff costs increase.
“Business owners need to spend time looking into market position, business costs and margins to ensure their price is sustainable,” says Anna.
Making a profit is key to small business survival – use these five tips to get the basics right, and you’ll be on your way to thriving.
This article was originally published in 2018 and has been updated with new insights and interviewees.
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