In business, you cannot realise your dreams unless you have funding. This requires you to know ways to increase sales fast.
While there are many places where businesses can get funding, generating money within your business is a key source of funding for business growth.
Money that you generate within your business reduces your dependence on banks and investors and allows you to keep full control of your business.
Not having enough cash flowing into the business is the number one reason why small businesses fail.
If you want your business to survive (and grow), your focus should be on creating a steady stream of “free cash flow”. This is the money coming into your business that is higher than your expenses.
Have 10% of monthly revenues as free cash flow
It is recommended to always have an amount on hand that equals 10% to 20% of your monthly revenues. If you have that amount of free cash flow, you will be able to take advantage of opportunities to grow your business.
This could be you seeing a new business opportunity on the market and having the money on hand to seize the opportunity. Or, it could be you deciding – based on feedback you are getting from customers – to add new products or services to your business.
To generate that 10% – 20%, you need a consistent flow of cash into your business. Here are four ways to achieve this:
1. Know your expenses
This is the golden rule of doing business. Make sure that you know ALL your expenses, including the small amounts that you take out for unforeseen things and the part of the money that is taken out for personal use.
One of the best ways to maintain a grip on your expenses is to keep strictly separate bank accounts. One for personal use and one for business use. Yes, you will be paying bank charges for both accounts, but it will be easier to manage your business if you let all business expenses flow through your business account.
Once you know your expenses, you can start focusing on how best to reduce them. Cutting costs helps you run a lean business and is a key way to keep more money in the business.
2. Be very careful with discounts
Giving a discount means that you reduce the selling price of your product or service.
The good news is that discounts can help you attract new customers. People who did not buy from you before may now decide to try your products or services.
The bad news is that giving a discount may cause you to sell your product or service at a loss. And selling at a loss will not help you generate a positive cash flow.
In addition, some businesses give out discounts at regular intervals during the year. During a national holiday, during the festive season, or when schools reopen after a break.
Depending on what you are selling, customers may get used to your discounts and start waiting for them.
Why should I pay full price when I know that next month you will be offering a 10% discount? At that time, I can buy enough products at a discount to last me until your next discount.
You are making more sales at a lower price and reducing your profit margin. You are also increasing sales during “discount time” and reducing them at other times. And you are training your customers to get used to the lower price.
My advice to you is this: if you offer a discount, make sure that you know the maximum discount that your business can afford.
To do this, you should know the true cost of your products or services. For example, when you are calculating your selling price, do you include the transportation expense to go and buy packaging for those products?
You should also know the gross profit margin for each of your products or services, because, without it, you cannot determine if your business is profitable, breaking even or operating at a loss. Then how can you determine what discount to give?
Finally, if you give regular discounts to customers, you must be willing to accept the consequences. If you do not want to train them to only buy at the discounted price, make sure to analyse the effect of the discounts on your sales. Then make adjustments as needed.
3. Encourage repeat business
Instead of discounts, I would advise you to focus on customer retention as one of the best ways to increase sales fast. This is especially important in volume-driven businesses, like retail.
Customers who buy from you, again and again, are the lifeblood of your business. They bring cash flow, profit and business growth.
To encourage customers to keep coming back to your business, your business should master the basics of customer retention.
After that, you can start looking at more advanced strategies for customer retention, like customer loyalty programmes and ways for your customers to interact with your business.
As your knowledge of your customer increases, your ability to sell to them will also increase.
Because “knowing your customer” means understanding the problems they face. And “selling” means finding ways to solve their problems.
Doing this well will lead to repeat business and new customers.
4. Sell product or service bundles
Customers are always willing to pay more for things that add value for them.
Does your business sell products that are often used together?
Examples are shoe polish & shoe brushes. Notepads & pens. Diapers & baby formula. Children’s clothes & toys. Cars & car maintenance services. Marketing consulting & social media management.
You can combine these products or services to create a bundle. Since the bundle is creating value for your customers, you can generate higher sales at a higher price.
You can also create bundles to get rid of excess inventory. In this case, the bundle includes a free or low-cost product from your excess inventory. Make sure that the add-on still has value for your customers.
Every business owner should be familiar with ways to increase sales fast because it helps them increase profits and stop waiting for banks or investors to give them money to grow the business.