When it comes to running a business, it sometimes seems like there are all sorts of metrics that you need to monitor. From customer acquisition rates to staff retention and lots of other measures, there’s plenty to think about and calculate. However, the only metric that truly matters for the long-term viability of your business is how much profit you make. This article will look at some of the main processes that you can institute within your business in order to become more efficient and ultimately drive those all-important profit levels upwards.
Customer relationship management
Having an adequate customer relationship management (CRM) system in place is often essential for boosting profits, especially if you’re a business-to-business (B2B) company or you operate a subscription-based business model. A CRM gives you the chance to organize information about your customers and their data or buying behaviors into an easy-to-read, actionable format.
This information can then be easily monetized. If you see from this CRM data that one of your customers opens all of your emails within one hour, for example, you can target additional email marketing resources at them to push them over the sales line; or if you see that a client has recently cancelled a subscription, you can call them to ask why and find out if there is another way that you can retain their custom.
At its core, the entire cash flow of a business is ultimately just income and outgoings. If your outgoings are too high, that’s a lost opportunity for profit – so it makes sense to think about how you can reduce what you spend. Cost-cutting moves don’t have to be enormous: some firms, for example, find that they can bring their costs down by switching to double-sided printing, or by moving some network services into the cloud rather than continuing to use a physical server.
Some companies even take very innovative and even drastic decisions when it comes to getting their costs down. Some firms that rent or own a large office, for example, ask their staff to move to a remote working model, and downsize to a much smaller space for team days only. Other major decisions, such as laying off staff, are more common but can also be more difficult to make. Of course, there’s no guarantee that any of these will suit you and your staff: the point is that it can pay to critically assess your whole cost list, because then you can locate the areas where you can cut back in order to save on cash.
Be clear about project scope
If you work in a client-facing business, you’ll know just how common it is for your profits to quickly get sapped by clients who don’t always respect that you can only devote a fixed period of time to their tasks. Prevention, however, is the best cure, and this means that it’s a smart move to get it in writing from the very start of the process what you’re responsible for, how long it will take to deliver, and what the consequences for the client will be if they cause you to run over a deadline by not providing you with what you need.
As entrepreneur Stan Gershengoren writes, this prevents your clients from falling into the trap of thinking that you can solve every problem they present to you at no further cost – and, as is made clear in Stan Gershengoren’s management guide, it also means that your clients will know all along where the limit of your capabilities lie, and are hence less likely to be disappointed.
In a similar vein, it’s wise to remember that clients don’t always know exactly what they need out of your services, and they may request a particular service without fully analyzing whether or not it is exactly right for them. The onus, therefore, is on you to ask the right questions to find out what the client actually wants: this way, you won’t have to waste what would otherwise have been profits paying to put a misunderstanding right.
Running a business brings with it a lot of requirements. However, ensuring that profits outweigh losses is one of the hardest – yet most important – of them all, and it’s wise to focus your energy on making sure that you achieve this end. Whether it’s through instituting a top CRM system or simply working out where you can reduce your business’s costs, there are lots of management process methods with which you can experiment. By trying out each one, adapting them for your specific needs and seeing which ones work for your firm, you can eventually see your profits slowly rise over time.