Increase Profit Through Small Steps
Small increases in key areas of your business can offer a great return on investment and effort. The 10% Rule involves looking at five key areas that can be tackled by most small business owners.
*1. Increase your sales lead generation by 10%. *
Contact your existing business customers and ask them for referrals. This is often the quickest and most cost effective method. Most customers don’t mind if you approach it in the appropriate manner. Also seek publicity opportunities in your local and regional media. Often they are looking for topical and interesting business stories and case studies. Look at using the internet and social media to increase your business footprint. It can be as simple as using e-Bay.
2. Increase your lead conversion by 10%.
Many times this is achieved by really targeting your sales lead generation e.g. asking your existing customers for leads. Also research your current customer base and identify in which market segments you have most success in converting leads into business. Identify lapsed customers and contact them. Often you can convert them back to you. For example, motor mechanics often don’t recontact previous customers. It can be as simple as making a phone call.
3. Increase your transactions / purchases per customer.
Start the next sale when you make the last. With service businesses such as motor mechanics, ask if you can pre-book in their vehicle for the suggested repairs you identify during the current service. Update your customers frequently on new offers and services, and maximise the impact of new stock lines through product releases and a networking event at your business for customers.
4. Increase your average sales per customer.
In fashion retail encourage customers to experiment with coordinated accessories when buying clothing items. Look to place these in a high traffic location, and especially adjacent to cash registers. Bundle products or services together, and look for complementary products from suppliers to add value without sacrificing your profit margin.
5. Increase your gross margin.
Revisit your core product and consumable costs, and your expenses. Then negotiate with suppliers to decrease them e.g. insurances through bundling with one supplier. Relook at your loans and interest rates, and what is currently on offer for refinancing. Negotiate with your financiers.
The table above is an example of applying the 10% rule.
So, increasing each of the five key areas by 10% has resulted in a 59% increase in gross profit for the month.
Make 2012 The Year for Thriving in Your Business
Peter Fowler Collins Hume
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The Small Print:
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