Every business wants to make a profit, and in order to withstand the test of time, a healthy profit is a necessity. But what’s the best way to increase your profit margins and boost your company’s bottom line? Is the secret cutting back on expenses or raising prices? Maybe cutting back on inventory or renegotiate supplier fees would help? Or perhaps your small business needs to amp-up its marketing plan.
Whether it’s finding the right balance between capacity and profits, implementing an innovative pricing strategy, or expanding your target markets, here at Thrive we are sure you’ll find at least one tactic among the tips below that you can implement when your company’s bottom line needs a boost. Here are some tips to increase profit margins for your small business:
- Always focus on profitability. Pricing should never be “off the cuff.” Your small business should have a pricing structure that fully supports costs and expenses, including profits. Can you imagine a business without profitability? It is simply impossible!
- Researching the market is essential to starting any new enterprise, but starting off by averaging what the competition charges is not a sustainable business model. A price list should be based on your business, not your competitors!
- Take all of your expenditures (even the hidden ones, like prep and finishing) and make sure your business’ floor plan is laid out for maximum efficiency. Then, start measuring realistic production times. Take a stopwatch if you have to.
- Crunch all the numbers, using times for typical yield based on actual production, and have a pricing structure that balances the numbers properly. One goal could be to get flat-rate pricing that covers all expenses, with the right profit built-in.
- The main thing to keep in mind is you got into the embroidery business to make money. With a little planning and using these four tips, your shop can grow steadily and remain profitable.
- When machines stop, so do profits. This is why there should be a variety of projects, with both low and high profit margins. Having the occasional high-volume/low-margin project intermixed with several high-profit, yet small-quantity jobs will keep your progress steady and manageable.
From customer service to quality control, Thrive can help identify the unique approach necessary to boost your small business and your bottom line!