Knowing what drives your business’s bottom line is key to its financial health and wellbeing. By setting up QuickBooks correctly, the inputted raw data generates these much-needed reports, which are essential to understanding your business levers.
But once you’ve analyzed the data and have a clear understanding of the products or services that lead the charge, how do you go about growing your bottom line? Particularly, how do you grow that bottom line while causing minimal disruption to your current (and successful) offerings?
1) Add cash flow services. A really effective strategy, particularly for service-based businesses that typically work on large-scale projects with long sales cycle, is to add smaller-scale offerings that are easy and fast to deliver. These services draw on the same skill sets as the large projects but on a much smaller scale. This makes for a shorter turn around and quicker payment. These types of services fill in cash flow gaps to keep the lights on while your business continues to work on the larger projects. They can also act as a loss leader to draw customers towards bigger and better things.
2) Focus on higher margin services or products. Large ventures with long sales cycles are fine (but see tip #1 on how to keep the cash flowing) but are you accurately measuring the financial value from each? Is your profit margin worth the effort? Again, this is a report that QuickBooks can easily generate if, and only if, it’s configured in such a way to do so. (Ask us, we can help set it up!) Once you understand the profit margins of each of your offerings, put a greater focus on selling the ones of higher value.
3) Give customers a reason to spend more. Always be sure that your customers are aware of any other relevant products or services offered by your business. This isn’t so much upselling as it is education. Should a client decide they need one of those additional services or products that they didn’t know you offered in the first place, your cost of sale is minimal because you’re selling to an existing client. For example, when we’re selling marketing packages, we make sure to tell our clients that, for an additional fee, we will also do all the content management on their website. And, when we’re signing on a new bookkeeping client, we’re sure to slip in the fact that we’re also small business marketing experts.
Naturally, every business needs a strategy that is tailored to its own situation, but these three tactics can help you identify opportunities that will give your bottom line a boost.
Don’t forget, the most important way to boost your bottom line is to hit the business development sweet spot. Our next blog will have some great advice on how to use the holiday season to stay connected with your network.