Ahh, profits: the name of the game.
At the end of the day, every commercial organization in the world is aimed at one thing: producing a rock-solid bottom line. That’s why people take loans, pitch angel investors for capital, and assume risk — it’s all for the dream of creating huge profits some time down the road.
If you’re a business owner trying to improve your business value by increasing profits, then you’re in the right place. In this article, we’re going to take some time to go over some of the best ways that you can begin increasing margins and boosting your business valuation, starting today.
1. Change Pricing
The first thing that you can do in order to improve profits is to change your pricing structure. This is the most low-hanging fruit when it comes to improving business value.
A simple pricing change could net you a significant extra percentage of revenue when it comes time to do the income statement. If you lowered your prices to gain market share and establish your brand, then it may be high time that you increased your prices.
Even if you get fewer customers, if you strike the right price point, you’ll come out ahead (given higher average customer values).
2. Outsource (Wisely)
Many businesses are scared to outsource menial tasks because they’re worried about quality control. However, if you outsource the right tasks (menial ones that do not require much skill or a solid understanding of your business/industry), then you may be able to free up a lot of time in your day to focus on business growth.
So, while it may be counter-intuitive, spending more money on outsourced services could significantly drive up profits.
3. Cover Yourself Legally
Nothing kills profits quite like a lawsuit that you lose. Make sure that you cover yourself and your business from a legal perspective with all of your policies and procedures. Also equip yourself with the right insurance policies (general liability and workers’ compensation should be the very minimum), so that you have a last resort even if you do get in legal trouble.
Having good insurance will also help you whenever you go through an enterprise value improvement procedure (check out this service for more info).
4. Develop Competitive Strengths
Competitive strengths allow you to build your brand and charge higher prices. If you are able to develop and popularize a unique selling point that other competitors in your industry cannot provide, then you’ll be able to command a higher market share as well as ask for a higher price for your product/services.
5. Focus on Developing Your Customer Base
Last but certainly not least, don’t focus just on winning new businesses. Many businesses ignore improving customer values, at their own expense. Focus on upselling and cross-selling your existing customers to improve customer lifetime value, which in turn drives up company value.
How to Boost Business Value Through Profits, Made Simple
There you have it. Equipped with this guide to boosting the value of your business, you should now have a far better idea of concrete ways that you can start increasing your company’s profit margins and business value.
For more business and valuation advice, check the rest of the articles on the website today! Visit the Sales and Business sections of the Everything Entrepreneur Blog to learn about increasing business value big time!