How to increase sales for my small business?
This is one of the questions I hear very often.
Businesses traditionally use lower prices to attract more customers. Through annual sales, holiday and seasonal discounts, when sales are slow, or as a strategy to win business from competitors.
The problem with reducing prices is that it is not a sustainable business strategy. Especially not for small businesses.
It reduces your profits.
(Unless you have a huge profit margin, but then you wouldn’t be reading this article.)
It encourages other businesses to do the same.
If your competitors see you dropping your prices, they will do the same to avoid losing customers. You all lose.
It encourages customers to change their buying behaviour.
If customers know that you regularly offer discounts, some of them will start waiting for the discounts before they buy.
It reduces the value of your business in the eyes of your customers.
If the only way you can distinguish yourself from competitors is by offering lower prices, what difference is there between you and your competitors?
If you are a big company, like Amazon for example, undercutting competitors on price is doable because you will have huge financial reserves and a huge market share. This is not the case for small businesses. For small businesses, reducing prices can lead to higher sales in the short term, but in the longer term, it will hurt your business.
So, what alternatives are there?
Here are 5 ways that explain how to increase sales for small businesses without reducing prices:
1. Evaluate your suppliers and change them if necessary
How many suppliers do you have for the same supplies/materials? Many businesses use multiple suppliers.
Sometimes, this makes sense. For example, if you cannot depend on one supplier to always have the stock you need.
But in other cases, spreading your purchasing across multiple suppliers means that your negotiating power is reduced.
Concentrating your purchasing with a limited number of suppliers can also open up doors to start adding new products (or services) that offer opportunities to increase sales.
Evaluate your current suppliers and see where you can make changes that will benefit your bottom line.
2. Reduce production and operational expenses
All businesses have financial waste. As in, you have expenses that are not 100% necessary.
When was the last time you analysed your business expenses?
Any savings that you find could be used to reduce prices. However, you could also use those savings to invest in your business, build up your value for customers, and distinguish yourself from competitors.
This is one of the fastest ways to increase sales for small business without reducing prices.
3. Cut costs
This, of course, is a no-brainer.
Once you have clarity about your expenses, start looking for ways to reduce them.
Can your employees take on some additional responsibilities instead of paying an outsider to do that work?
Then you can use this time to work on your business growth strategy and ways to increase sales.
4. Streamline business processes
Are there areas where you can improve efficiency? Reduce costs?
For example, your hiring process. Or your marketing process.
The less time and effort you spend on inefficient processes – whether production processes or business processes – the more time you can spend working to increase sales!
5. Incentivise customers to pay faster
If customers take a long time to pay you – because you offer them credit – it may also mean that they take a longer time to re-order. After all, if you owe somebody money, you usually try to avoid them.
And if you are spending time chasing customers, you cannot use that time to develop growth strategies for your business.
Consider offering your customers a discount if they pay in full at the time of purchase. Or, find other ways that will encourage them to pay faster.
It will save you time, your cash flow management will improve and you and you can start to work on other strategies for growth.
Once you’ve done this, here are 5 additional ways to increase sales for small business without reducing prices.
This article was originally published on LinkedIn.
