Small and medium-sized enterprises (SMEs) in developing and emerging economies often face unique challenges when trying to grow their profits. However, using the right practical and operational strategies, you can find ways to double profits in the next 12 months. Here are 12 strategies that you can use to achieve this goal:
1. Know all your expenses and control costs
If you truly want to double profits in the next 12 months, this is a key requirement: 100% control of costs and expenses.
This can be achieved by confirming that you know all your expenses, negotiating better prices with suppliers, cutting unnecessary expenses, and streamlining operations.
- A building materials store might negotiate with suppliers to lower the cost of goods
- A beauty salon might focus on the best-performing services and sell unnecessary equipment that is only used for services that don’t sell well
You can also consider automating some of your processes to increase efficiency and reduce labour costs.
By implementing cost control measures, you will ensure that you are spending money where it is most needed, and that you are not wasting money on unnecessary expenses.
This can help increase profits by reducing expenses and increasing efficiency.
2. Product and service diversification
Another strategy for increasing profits is to diversify your product and service offerings.
This can be done by adding products or services that complement your current offerings.
- A bakery might start offering catering and event-planning services
- A clothing manufacturer might start offering custom tailoring services to specific types of customers
By diversifying, you can reduce your risk of relying on a single product or service. It is also a good way to increase your customers and develop new sources of revenue by offering additional services to existing customers.
In addition, it helps you to take advantage of market opportunities that you might not have considered. Take a look at these business growth strategies for additional advice.
3. Increase prices
Another strategy to help you double profits in the next 12 months is to increase prices.
Now this is a strategy that scares many business owners that I talk you. They are afraid that their customers will abandon them.
That is why this strategy requires careful planning:
- Do market research to identify the various price points and how your products or services compare, including in terms of quality.
- You need to know which of your products are in high demand. If this is because you are competing on lowest price, you need to find alternative products or services.
- You need to have a well-defined Unique Selling Proposition. Meaning: customers have a reason to buy from you instead of your competitors.
- You cannot just increase prices for all products. If you increase prices for certain products or services, consider reducing prices for others. Or, introduce additional products to offer customers more choice.
- You should test the market response and be prepared to make adjustments as needed.
- A construction company might increase prices for premium services that are in high demand
- A small software development company can offer customers a bundle of products and services at a higher price
Be aware that a correct pricing strategy can be a powerful tool to increase profits, as long as it is based on market research and reflects the value of your products or services.
4. Increase sales volume
Increasing sales volume means selling more.
You can also test new sales channels, such as online marketplaces, to reach new customers and increase sales volume. You might also consider expanding your sales to new markets, whether in other regions or across the border.
By increasing sales volume, you can take advantage of economies of scale and increase your profit margins.
Additionally, expanding to new markets can also help you mitigate the effects of seasonal fluctuations in sales or economic downturns in your home-country.
- A furniture manufacturer might start exporting to other regions or countries
- A local crafts business might add a new sales channel and start selling directly to consumers through Facebook or Alibaba
5. Improve product or service quality
Another strategy to double profits is to improve product or service quality.
This can be done by investing in research and development, better materials and/or equipment, and improved customer service.
- A restaurant might invest in better ingredients and charge higher prices for particular dishes that attract more profitable customers
- A marketing agency might invest in better software tools so that they can offer higher-quality services and increase their prices for these services.
By improving product or service quality, you can differentiate yourself from competitors and charge higher prices for your products or services.
Additionally, improving product or service quality can lead to increased customer loyalty, repeat business, and positive word-of-mouth marketing.
6. Optimise your website or business page
Many businesses want to expand, but don’t even have a website or professional Facebook page.
When you start attracting new customers who don’t know you, they are going to look for information about your business. They may look for you on Facebook or on Google. If they cannot find information about you, or if the information is very old, they will not trust you.
No trust = no business.
This is why optimising your website or business page on social media is a good strategy to help double your profits.
This can be done by making sure your website is mobile-friendly, easy to navigate, and has a clear call to action. A call to action can be a button saying “Call now”, “Request a quote”, or “Schedule an appointment”. It will depend on what you are selling.
- A clothing retailer might optimise their website to make it easier to shop on mobile devices
- An electronics company might optimise their business page to make it easier for customers to request a quote.
Having a well-designed website or business page can help you attract new customers and increase sales.
Additionally, by making sure that your website or business page is mobile-friendly and easy to navigate, you can ensure that it can be accessed by the majority of your target audience, regardless of the device they are using.
7. Leverage social media
I already mentioned the importance of having an online presence in point 6. But let’s drill a little deeper and see how leveraging social media can also help you double profits.
Basically, this can be done by creating a strong online presence, engaging with customers on social media, and using social media to encourage people to take a certain action.
- A bakery might use social media to showcase pictures of their products and host giveaways
- An interior design consultant can use social media to showcase pictures of work done for customers and give basic advice to potential customers.
If you are considering using social media, make sure that you can put in the time and effort required to maintain it. If you launch a Facebook business page without being able to give regular updates, it will be a waste of your time.
This also applies to other social media channels.
8. Focus on customer retention
Customer retention is one of the best ways to quickly grow your business without spending a lot of money.
Here are some of the benefits of higher customer retention:
- You start saving more money. It is 6 to 7 times more expensive to acquire a new customer than it is to retain an existing customer.
- Your profit starts increasing. If you increase your customer retention by 5% your profit will increase by about 25%.
- Customer loyal increases. Loyal customers buy more often and spend more money as compared to new customers. They keep coming back to your busiess because they understand the value of what you are offering.
- Your business starts growing faster. Loyal customers help you build your business because they encourage their friends and family to buy from you. You keep getting new customers through word-of-mouth marketing.
- A restaurant might create a loyalty programme for regular customers
- A graphic design company might focus on building a strong brand – using graphics and client work – to attract more repeat business.
9. Leverage partnerships and collaborations
A lesser-used strategy to help double profits is by leveraging partnerships and collaborations.
This can be done by partnering with other businesses, organisations, or individuals to increase sales and expand your reach to access new customers.
By leveraging partnerships and collaborations, you can access new resources, markets, and customers that you might not have been able to reach on your own.
Additionally, partnerships and collaborations can help you to increase your visibility and credibility. This can lead to increased sales and profits.
Furthermore, you can leverage partnerships and collaborations to reduce costs and increase efficiency in your own business.
- A supermarket might partner with a local NGO to drive sales and give back to the community
- An office furniture store might partner with local artists to sell their products
- A logistics company might collaborate with other logistics companies to expand their service offerings
- A manufacturing company might collaborate with a local research & development center to improve product quality
10. Optimise pricing strategies
Before you consider optimising your pricing strategy, you need to first determine if your product or service is profitable. If not, that is the first issue you need to tackle.
I have often encountered businesses who tell me that their product or service is profitable, but upon analysis, I find that they are not including all costs and expenses in the price calculations.
Don’t make that mistake.
However, if your products and services are profitable, do some market research to identify the optimal price points for products or services. Also pay attention to market trends and consumer preferences.
- A consulting firm might implement dynamic pricing based on the complexity of the project
- A marketing agency might offer bundled services to clients to encourage them to buy more.
11. Implement a data-driven approach
Another strategy to help boost profits is to implement a data-driven approach.
This can be done by gathering and analysing data on customer behavior, market trends, and competitors to inform business decisions.
- An agricultural business might use data to optimise crop yields
- An e-commerce website can use customer data to finetune marketing campaigns.
12. Invest in marketing
Lastly, you can double profits in the next 12 months by investing in marketing.
I don’t mean just increasing your marketing budget in whatever way.
Once you know who these customers are, determine the best way to reach them.
Then, create your marketing campaigns using the images and words that appeal to them.
And finally, use highly effective and inexpensive marketing strategies to target them through the channels that you have identified.
- A manufacturing company might invest in content marketing to attract new customers
- An accounting firm might invest in email marketing to attract a particular kind of customer
As a small or medium business owner, it is absolutely possible to double profits in the next 12 months if you implement the right strategies.
The 12 strategies that I have shared in this article are inexpensive, easy to implement, and have the potential to bring you great results within a short time frame.
But remember that continued success only comes if you keep learning and adapting, so make sure to monitor the results and make changes as needed.