5 Things Your Small Business Should Do Today To Increase Profits Ross | September 8th, 2009
I never fully understood, until co-founding crowdSPRING, the challenges of operating a small business. There’s a lot to do but so little time to accomplish everything.
Here are five practical tips from my own experience with crowdSPRING that you can implement today to increase sales and profits for your small business:
1. Evaluate What’s Working And What Isn’t. Wasted time could be a small business owner’s worst enemy. Your time is limited but you have a great deal to accomplish every day. It’s OK to have occasional unproductive days, but most successful small businesses figure out what works and what doesn’t – and focus on the things that work for them.
For example, it’s entirely possible that a huge amount of your effort is spent on daily activities that aren’t contributing to building your brand, your sales/profits or accomplishing the other meaningful goals you’ve set for your business.
Some small business owners are so protective of their accounting, for example, that they’ll resist the need to bring in a part-time accountant to help them to maintain their financial records. While this appears to be prudent – after all, you’re saving the cost of paying a part-time accountant – such decisions turn out to be very short-sighted for many businesses. If you’re running a solo business, you could be focused on sales during the hours you devote to accounting. Or you can be working to improve your product or service.
How You Can Start Today: Start by listing on a sheet of paper – or in an electronic document – all of the tasks you do on a regular basis (hourly, daily, weekly, monthly). Do your best to break these tasks into logical areas, such as sales, accounting, marketing, inventory, etc. Second, assign times to each task. How long does it take you to pay your bills every week/month? If you have to maintain inventory, how long does it take you to review your inventory and order replacement inventory? Do this for each task to begin to understand the time you are spending on each activity. Third, assess whether each activity is important. You’d be surprised how many things we all do during a normal day that add little value to our business. Once you understand the importance of each activity, rank the activities (or logical areas) to better understand where YOU should be focusing. If you’re like me, you’ll find plenty of activities that are only modestly important – but those activities sometimes take the most amount of time to accomplish. Determine whether those activities are sufficiently important to continue – or whether you need to find someone else (part-time or full-time) to help you with those activities. We all have areas in which we excel. And we all have areas in which we don’t. Focus on the areas where you bring the most value to your business and find the right people to fill the gaps in areas you don’t. If you focus on the things that work, you’ll be more efficient and productive, and you’ll see meaningful impact to your bottom line.
image credit: wpwend42
2. Experiment With Hyper-Local Advertising on Facebook. Most small business owners don’t know that in March of this year, Facebook made some very powerful upgrades to its social network. Those upgrades are especially important to small business owners because it’s now possible to target customers based on the language they speak and where they live/work. This means that a bakery can now advertise specifically to people who live within a certain mile radius of the bakery. A language tutor can advertise to families who speak Russian or Chinese – within a 10 mile radius – to target families that may want to hire a tutor for their kids.
How You Can Start Today: Advertising on Facebook is comparatively inexpensive and more importantly, measurable. When you place a print ad in your local newspaper or in a Yellow Pages directory, you are rarely able to determine whether the cost of the ad is justified. However, when you run ads on Facebook, you’ll get reports that will tell you exactly how much it’s costing you and by combining your Facebook advertising with your analytics reports, you’ll be able to measure the effectiveness of this type of advertising. I am not suggesting that hyper-local advertising will work for you – but you should give it a try by setting a small budget and experimenting.
3. Study Your Competitors. Most small businesses are so focused on their own activities that they never take the time to understand and evaluate their competitors. This is a mistake. While you no doubt are operating your business better than many of your competitors, you’ll always learn from studying your competitors. Sometimes, you’ll learn what you can do better. Other times, you’ll learn about what you should NOT do.
How You Can Start Today: A few weeks ago, I wrote a detailed post sharing how I evaluate competitors. In that post, I offered 10 tips to help other small businesses evaluate their competitors. I encourage you to read that post or the more detailed post in my personal blog, where I presented the 10 tips with a detailed analysis evaluating two competitive businesses – Mashable and TechCrunch.
image credit: TheBusyBrain
4. Set Meaningful Goals. Most small businesses – even successful small businesses – fail to grow because the owners don’t take the time to set meaningful goals. I’ve talked to thousands of small business owners. Most want to work for themselves and operate a business that will provide them and their families a good standard of living. But those aren’t the goals I’m talking about. Most small business owners fail to set quarterly or yearly goals for their businesses. They simply operate the business, focusing on day to day activities, without establishing what they hope to accomplish within a certain amount of time. While your overall goal can be to make a ton of money and find enough free time to enjoy other activities, you should establish operating goals for your business.
How You Can Start Today: You can start by asking yourself where you want your business to be six months from today? One year from today? If you are the sole owner/employee, do you want to have five employees in one year? If you have five clients, is your goal to have 15 in six months? If your revenues are $30,000 this year, do you want to have revenues of $75,000 next year?
For example, when we evaluated whether to participate on social networks, we looked at five goals: lead generation, building a community, building brand awareness with a new audience, managing brand perception, and customer service. You can read more in my post from earlier this year – Can Social Media Help My Company?
image credit: ericabiz
5. Find Time To Develop Strategy. Most successful small businesses are successful because they develop smart strategy and execute on that strategy. Yet many small business owners often confuse decisions and strategy.
Every small business owner makes decisions about their business. For example, they decide where to market, how to market, how much money to spend on marketing and sales, what types of products and services to market and sell, etc. These decisions are important – but they are not strategy. These day-to-day decisions are like the moves we make in a game of chess. Knowing how to make a move lets you play the game. It takes strategy and execution to win.
How You Can Start Today: You can start by making sure that you set aside sufficient time every month or quarter to assess and develop your strategy. We made a mistake when we first launched crowdSPRING by focusing on day-to-day activities. Because we were extremely busy, we didn’t set aside sufficient time to develop strategy. We mistakenly assumed that our day-to-day decisions were the execution of our strategy (but we later determined that they were not).
During the time that you develop strategy, you’ll want to focus on your goals (it’s impossible to develop strategy if you don’t understand your goals). Assess your product/service offerings and determine whether you need to expand or reduce the number of products/services you offer. Some questions you might ask about your business:
- What is my current strategy?
- What is happening in my industry or with my competitors?
- What are my growth, sales and profitability goals?
- What products and services do I currently offer?
- What products and services do I want to offer in the next X months?
- What will I need to do to sell these new products/services?
- How will I compete against X, Y, Z competitors?
Once you start answering these (and other questions), you’ll begin to understand what it will take for you to achieve your goals.
image credit: Mukumbura
Do you have any suggestions about what else small businesses should do today to increase sales and profits? Or do you have a comment or story to share about the suggestions I’ve written about? Please take a few minutes and leave a comment.