How do you increase business profits? Answer the following questions carefully, and you’ll have a good start.
1. Can you increase the average sale? A restaurant with 25% profit margins might make 50% on additional sales to existing customers (less labor to bag one large order than two smaller ones). Asking “What would you like to drink with that?” works, and it’s just a start.
2. What’s the least expensive way to get a customer? Before you spend another thousand dollars advertising to get new customers, could you get as much business by spending a few hours contacting previous or existing customers?
3. What low-risk ideas can you try? I once sent a letter to several visiting basketball teams, inviting them to visit our restaurant and giving the coach a free meal as an incentive. The cost? Two dollars. The payoff was two busloads of customers. At that rate, you could increase your business profits even if nine out of ten ideas fail.
4. Have you tested prices? I knew a store that sold a product for $1.05, that cost them $1.00. For $1.20, it is doubtful that they’d lose half their sales, but if they did, they’d still make twice the profit. Some things even sell better at a higher price. Test.
5. Can you measure your advertising results? How do you know that you’re not spending more for a customer than they’re worth? Coupons, customer surveys, and other methods of measurement are a must.
6. How do you know your customers are satisfied? The worst restaurant meal we ever ate went down without comment, but we never returned to that restaurant. Maybe the owner should be talking to the customers.
7. Can you enhance the perceived value of your product? Years ago, I sold walking sticks for $10 at flea markets and $20 at craft shows. Sometimes, location alone can enhance the perceived value of a product. What else can you do?
8. What are similar businesses doing? See what your successful competitors are doing. Can you do the same?
9. What other products can you sell? There’s a reason stores have candy and magazines near the checkout. Extra sales are a great way to increase business profits.
10. Can you use your customers as salesmen? Word of mouth is a start, but what other ways can you get your customers to bring their friends to you?
These were culled from a longer list. I call it “stolen business ideas,” because I can’t credit the original authors. I took them where I found them over the years with gratitude, but without notes.
