Doing Business is not that easy, it requires a lot of struggle and hard work. And at the end of the day, it does not really matter that your business is big or small in scale. But what matters is profitability.
If you own a large business and fail to generate high profits then there is no benefit in having high-scale commerce. On the other hand, if the business is relatively small and generating exceptional profits, then you have won the game. As at the end of the day, the aim is to make a profit, to scale up in revenue not in size for hailing the expenses.
We bring you some of the enticing business tricks that would help you in turning small profit into big. These tips are collectively designed for the different businessmen who are willing to elevate small profits into big. The traits will make a direct hit towards profit enhancement and strive to bring improvements directly or indirectly.
Top 5 business tricks to elevate small profits into big
Given below are the top 5 tricks that one must follow to avail best gains from the business:
1. Retain old customers
You might have heard that retaining customers is cheaper than acquiring new ones. The statement simply lays stress on holding some loyal buyers who are deriving profits into our business.
Also, it is quite economical as we are not spending much on promotional complexities and do not have to rely on aggressive marketing strategies for building new customers.
If you will hear it from the big business out there, you will be surprised to know that they are spending 15-25% of their revenue on promotion and marketing activities for acquiring new customers.
2. Apply loss leader pricing
This is one of the mind-boggling strategies that will enhance the business's profitability. And many few businesses are using this tactic to elevate small profits into big. It works as a powerful trick for alluring customers and making them believe that the products or services sold by this company are quite cheap and reasonable.
Example: Many retail stores label a few of their products at a very cheaper price and even sell them without a margin, just to make customers believe that they will not get the products from anywhere at this price.
And customer optimistically feels an attraction and buys different products thinking that the price of other items is also cheap. He fills the shopping basket heavily and likely many other buyers think the same way and ends up buying more.
You may also like: How Gillette raised market share with Loss leader pricing strategy?
3. Power of negotiation
In other words, we can call it bargaining power and it is the best way to save some expense that would ultimately bring out better profits to the business. This trick might be more relatable to the retailers who are directly selling their products by engaging with the customers.
For example: if a retailer is procuring an item for Rs. 500 after including all the handling and packaging cost and pulling it really hard to make customers purchase the product at Rs.700. At the end of the day, he is getting a margin profit of Rs.200.
Now, if the retailer looks for more suppliers or tries to convince the supplier to offer the item at a better price then he might do a great job. Somehow if he turned successful at negotiating for the cost price and is able to get the same item for Rs. 450, then he is saving Rs.50/item.
The next step is to lower the selling price that was charged by the retailer earlier and reduce it to Rs.650, then the customer would happily go buy the product from the retailer who was earlier selling at a higher price. Additionally, it will boost sales as the other competitors are demanding Rs.700 while this smart retailer is selling at a lower rate.
4. Improve the sales volume, profit will follow
As we discussed above that how getting our produce at a cheaper rate can create a big difference. But sometimes the conditions don't support us. We might not able to get our product at a better price. However, we still got a trick to attract more customers and that would indirectly elevate small profits into big.
We can reduce our profit margin. You can relate it with the price penetration strategy that is opted for increasing the market share by lowering the price. And when the price is low customers will follow. And finally, when sales will increase there would be a great hike in profitability.
5. Push products or services that derive you a better margin
There are varied products or services offered by the businesses but not all of them derive the same profit margin. Since the goal is to elevate small profit into big we need to push those products or services that derive us a higher margin.
Simply take an example of a footwear store, the merchant knows different types of footwear available and the cost of procuring them individually. So, the idea is to try to serve those items that yield a better margin.
This does not mean that you are disconnecting with the need of the customers but the motive is to inspire the buyers to avail those products or services that award better profit.
Take away
We already read that profitability does not always follow by business expansion or by scaling it but by adopting some of the smart strategies that can enable us to enhance our earning capacity.
In the article above we extracted some of the valid business tricks that would assist the businesses to elevate small profit into big. The 5 strategies include retaining old customers, applying loss leader pricing, power of negotiation, improving sales volume, and pushing products or services that derive us better margins.
These tips might to applied in a different manner by the different business domains but the aim is to obtain the best possible results.
Also read: Tips for increasing IPO allotment chances
