People are always looking for value. Whether you are buying a car, purchasing a flight, or shopping for a new computer, you will likely shop around a bit to find the best value.
You should treat your business the same way!
How to Find The Value
Understanding where to find value in your business is extremely important when improving your bottom line. Knowing where the value is will empower business owners and will lead to a healthier business and a better bottom line.
Value is found in many areas of your business. Some are obvious, and others are not. No matter where your business is today, there is always room for improvement.
A Few Questions To Ask Yourself…
- Where are you spending money without getting any return?
- In what areas of your business can you find more value?
Take a look at your financials to examine where you have spent money with little to no return. Regularly review your P&L report to see where you stand after all the expenses have been paid. Just because you spent money on something last year, doesn’t mean you have to continue with it going forward. Many business owners will find numerous expenses they can cut without negatively impacting their business.
Now, take a look at the things that have been working for you. What can you do to maximize their potential? For example, if you are running social or email campaigns, are you getting all you can out of them? Value is about understanding all areas of your business. It is about knowing what is needed and what is working to provide you with consistent and positive returns. Once you know what’s working, you can make smart, fact-based decisions about how to move forward.
Where to Look
Once you have the numbers, you’ll want to dive in a little deeper. Here are three areas of your business where you can find value, thus improving your bottom line.
The Right Sales Mix
It’s essential to understand your sales mix broken down by product, service, segment, or category. Different areas of your business can vary in gross margins and the overall contribution to the profits of your business. Ask yourself… which products are the most and least profitable?
Once you have the answer to this, you can focus your marketing and your efforts on shifting to a more profitable mix. You can increase your profits by merely generating better sales, but it all starts with understanding your margins and focusing your efforts in the right places.
Cost of Goods Sold & Pricing
Are your product costs rising at a faster rate than what you’re charging your clients? Are you actively checking the market to make sure your product costs are in line with the market? You’ll need to stay on top of market rates to make sure you are really getting value. If you haven’t done so in a while, take some of your routine costs out to bid. It doesn’t necessarily mean that you have to buy from an alternate supplier, but it gives you the data point, and leverage to negotiate the best costs for you and your clients.
Take time to evaluate your pricing strategy. Are you charging the right amounts for what you are selling? Find out what the going rates are for services or products you provide to make sure you aren’t selling yourself short.
They say a penny saved is a penny earned, and this is true. Every dollar you save in expenses goes right to the bottom line. Look for variances across all expense lines for the past month and past year. Start with the larger expenses variations first and determine if the additional cost is needed going forward.
Look at your marketing budget and ask yourself if you are really spending your money in the right way. Evaluate the time and resources you put into the different platforms you use and whether or not they are driving the results you want. Learn more about Marketing Analytics here.
Whether you are using Facebook, Linked-In, Instagram, or other platforms, make sure the cost and time are worth it for you. And don’t forget our favorite, email marketing, which can sometimes be overlooked or neglected. You can also check out your blog content to make sure it is driving traffic, sales, and getting people to send their contact information.