5 Tips to Easily Make More Profit without Making Any New Sales
Do you need (or want) more money?
Then, make another sale.
That’s the conventional wisdom, and it sucks.
Instead of always thinking about revenue increases as requiring more sales, try one (or all) of these five strategies to make more profit that my clients work with every day.
These strategies will help you feel less pressure around your growth goals because unlike sales growth, you probably have most of what you need to implement these strategies already. When we need more sales, we must go outside of our own office to find new relationships and customers, right? On the flip side, most of the ways I’ve found to be most successful for local businesses to increase their profits is through margin optimizations that take place from within the existing company resources.
Most local businesses have a vague notion of margins, but the easy math is the math that sticks. That means, to an owner or a sales rep, the number on the invoice is the one that sticks. We set that as the amount we have to spend and hope there’s something left over at the end.
How often do you get to the end of a project and realize there’s no money left for you, for savings, or for raises?
That’s where understanding how to improve margins comes in.
When we maximize the way we produce our work, we increase our profits without adding additional sales pressure.
To illustrate how this works, meet your friendly neighborhood air conditioning contractor. We’ll call her Jane.
Jane has three vans on the road with two workers on each van.
She mostly has residential homeowners within about 25 miles of his office as customers.
Her average service call takes about two hours, and each crew does an average of three jobs per day.
That means he has to manage production at as many as 45 different locations each week. Whew! That’s a lot to keep up with!
Because there is so much driving and so many variables on each job, Jane’s crew finds they are constantly missing items they need to do the work. At least once a day someone is leaving a job to retrieve a forgotten item at the office or a hardware store. By the end of the week, this adds up to six hours of lost production time each week -- or the equivalent of three average jobs worth of revenue!
This is how we end up working more and more for less and less. The more stressed we are, the less we pay attention to our margins. The less we pay attention to our margins, the less profit we make.
When community-based business owners like Jane call me, they always say the same thing:
“How do I get more sales?”
What Jane doesn’t know is that what she really needs is better systems to manage her distribution and operations. That way, her margins are better. When that happens, growth begins to mean freedom instead of added stress.
Healthy margins are what allow a local business to both grow AND rest.
So how do we improve our margins?
Here are 25 ways that I have experience with. There are many others, but these are the most common for Local Rock Stars. Try one or a few...
5 Easy-Peasy Ways to Improve Your Margins for Increased Profits
Let’s tackle the simple stuff first. These five strategies for increasing your profits are ones you’ve probably heard before, but are you taking action on them?
If not, set aside a few hours to do one each month until you’ve finished all five. None take more than three hours to implement and all are relatively pain-free.
1. Review your last 60-90 days of bank statements for needless expenses you can cut.
The first place we always look is for easy unconscious spending. Depending on your money mindset, there can be a lot or a little here. I’ve seen companies save as much as a thousand dollars a week just by becoming aware of how much they were spending on meals and coffee each week.
In this step, you’re not looking to go on an expense diet. Instead, you’re looking for thoughtless waste. Some of the most common examples are:
- Buying coffee or treats several times each week for your team instead of keeping the office stocked with good stuff at a lower price-point,
- Subscriptions and renewals that need to be canceled,
- Piercing the corporate veil buying personal items through the business.
If you find any of these, highlight them on the statement and process through dealing with them once. Then, you’ll never have that needless expense again.
2. Cancel your lowest-performing marketing and/or SaaS spend.
Local Marketing (like sponsorships or small ads) and SaaS products have one big headache in common...
What begins as small amounts quickly add up to real dollars.
The $25 here and $150 there quickly add up to major dints in your revenue. Take a look at what your spending on these two categories and eliminate the least useful item in each. In my experience, this can save a small company as much as 20% of its annual budget. Waste on marketing and online subscriptions are happening in nearly every company I’ve ever worked with including my own. Keep track of it, so it doesn’t happen to you.
3. Call your financial institutions and ask the question, “What can you do for me?”
Are you paying a monthly fee for your checking account or too high of a rate on your credit card processing? If so, it’s often less painful to deal with than we think. I learned this magic trick from (TK) and it works about 75% of the time.
Simply call or visit your financial institution and explain why you want the fee removed or the rate reduced. When they say no (which they often do), ask this simple follow up question:
What can you do for me?
This method has helped me get extras from one-year fee waivers to two-three point interest rate reductions.
As a former banker, I understand that most customer service people (even the ones with fancy letters like SVP behind their names) don’t have much authority to wave fees these days. But what almost all of them do have is some token discretionary giveaway that requires nothing more than manager approval. So, maybe your banker can’t waive your checking account fee forever, but he might be able to wave it manually for six months. You won’t know until you ask, and usually when you do ask they will do something that saves you cash.
If you ask this question and the person says they can’t do anything, it might be time to start thinking about changing companies. Yes, that’s a more painful process, but in today’s competitive world there’s no reason to accept poor service from a financial institution or a digital company. There are too many other options available.
4. Implement a morning kick-off/launch checklist with your team.
Payroll is the place companies waste the most money. But it’s not for the reasons you think. Most of the local businesses I encounter are too worried about the rate people are earning and not worried enough about what they are actually doing while they are on the clock.
The most likely time for a company, especially one where the employees leave the office each day to work, to waste payroll dollars is in staging for the day. Beginning the day with a simple checklist of what needs to happen in the first 30 minutes of the day is the easiest way to eliminate payroll waste caused by pre-launch confusion.
5. Stage an impulse-purchase range upsell for your regular services.
If you’ve ever read a business book you’ve probably seen the wisdom that goes something like this:
It’s always easier to expand an existing relationship than to find a new one.
So why do we spend so little time expanding our existing relationships? Because we don’t have easy upsells identified.
If Jane’s crews see a total of nine people each day and upsell 30% of them a $100 per year maintenance plan, at five days per week that’s approximately an extra $100,000 in revenue each year for almost no additional work.
Easy upsells are the simplest way to grow your profits fast, and you don’t need any new customers to do it.