Perhaps, the silliest question to ask a business owner is, “Are you interested in making more money?” The obvious answer is “yes” but apparently many entrepreneurs are not entirely sure what to do in order to increase their profit margins. According to Steven Gillman of IdeaMarketers.com, most business owners aren’t asking themselves the right questions.
On the website, Gillman poses a number of questions that business owners should ask in order to better place themselves in a position to make more money. The first question is “What is the least expensive way to get a new customer?” Of course, there are many options including advertising to grow your customer base. But it’s not so easy to do so when working with a small budget.
Gillman suggests that you consider all of the ways that you have accumulated your current client base to date. Utilize your strengths and attempt to grow your customer base using the most cost-effective methods possible. Word of mouth, as we have mentioned in past blogs, can certainly go a long way. Think of all of the ways you can “wow” your customers so that they recommend your business to others.
The next question to ask, says Gillman is “What low risk ideas can you try to increase profits?” He writes: “There may be new services or products you can try that take very little risk. Starting with these lets you fail nine times out of ten and still come out ahead after the tenth.”
“Can you ‘educate the customer’ to increase sales?” is another important thing to ask. Gillman advises that you inform the public of just how much your product or service can help them. It’s important to communicate that what you offer is essential and of great value. Gillman uses the example of photos that show dust mites living in carpet. If these photos were more prevalent, he surmises, people would clean their carpets more often.
Educating the public about why they should come to your business more often is an important way to drive up sales consistently. Another question that should be asked is “Have you tested prices?” Gillman notes that sometimes items actually sell better when they are more expensive.
He writes that “on a product with a ten percent markup you can double the profit with a ten percent price increase. Unless you lose half of the sales as a result, you’ll make more money. The only way to know these things is to test.” This leads him to his next question: “Can you increase the average sale?”
In other words, Gillman suggests that you continually think of ways to ‘upsell’. This isn’t much different than someone asking if a customer if he “would like fries with that” when he is ordering a burger at a fast food restaurant. As Gillman puts it, “it is often easier to find ways to increase the average sale amount by twenty percent than to find twenty percent more customers.”
There are, of course, many more questions that entrepreneurs should ask themselves when preparing to take steps to increasing their profits. Getting into the habit of answering these questions will help you to develop ways to make more money for your business.