Boost Your Profits

It’s not the total amount of sales that matter – your business can still lose money if you fail to close attention to your profit margins despite the seemingly profitable market performance.

Budding entrepreneurs setting up their new business should be aware of one very important aspect of a business enterprise – sales does not always translate directly into making money. Business can only make money if ALL operating costs are covered adequately with plenty of room to spare, this is the only time business owners can turn a profit.

Entrepreneurs go into business to make a profit, but you can only do so if you will diligently do the math to determine the breakpoints wherein money can be made from the sale of products or service. It is not business if you decide to give away hefty discounts (or services) which cut profits to the bone.

Firstly, to maximize margins you have to include profitability into every policy and every sale. Next, you should hire an accountant who can help you determine net revenues after expenses based on the cash on hand. Finally, the entrepreneur should strive at all times to keep operating costs as low as possible – a dollar unspent is an extra dollar in your pocket.

Transactional Profit Generation Tips
  • Never undercut your product or service prices, always take the high ground. If you fail to do so, you are courting failure right off the bat. Discriminating customers are not easily wooed with low prices, they think that the price is the only thing that’s good in the product or service and they’d rather pay more for good value for money – quality. Besides, if they discover a cheaper source for the same type of goods or service, there’s no reason to come back to you. To come up with a strategic pricing scheme, always take into consideration costs and break-even points. Always offer a product and/service that includes value to justify your price.
  • Do not maintain a single pricing policy, always opt for a good mix of high-margin products and services for a better and more manageable profit-making potential. Always know what the margin differences are between the various products and services you offer to the market. The important thing is to push products wherein you have bigger profit margins.
  • Forget giving discounts on your product price instead think of something innovative like giving away something else such as a company shirt, a pen, training time, free service, etcetera. This keeps customers coming back for more because of the same price cost with a special offer of added value or free service. Special freebie offers draw customers to buy without the giveaway taking a chunk your profit margins.
  • Include complementary products and/or services with what you sell. Doing so helps increase the profitability of the main product and could possibly become a viable key profit main and complementary product combination.
  • Maintain a lean inventory. Always stock up on fast-moving products or services in order to maximize profitability at any given time. Never get bogged down with slow-moving items or service provisions.

Keep in mind that the end goal of a business venture is to turn a profit at the end of the day. The bottom line is how much you earn when you finally calculate the day’s sales, not how much you were able to sell.

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