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Home»Articles»Profit Maximization: Strategies To Make Your Business More Profitable
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Profit Maximization: Strategies To Make Your Business More Profitable

Tito Philips, Jnr.By Tito Philips, Jnr.April 15, 2013236 Mins Read
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Continuing our discussion on cracking the profitability code, in this unusual article, I will be sharing some very simple tips you can immediately put to use in your business to increase profitability.

It doesn’t matter whether you are a small startup or an international corporation; every business is looking to grow its profits.

So when it comes to increasing your profitability in business, after considering both the universal laws of profitability and the peculiar elements of profitability, there are two simple options open to you;

1.  Increase Revenue [sell more]:

There are several ways to increase revenues. To apply this profit maximization option, here are four things you can do;

  • Firstly, increase the quantity of sales, for example by better marketing the product or improving quality. Analyze where money is majorly coming in from and focus on making more sales in those product/service categories.
  • Secondly, up-sell to existing customers, for example by persuading them to buy enhanced services or accessories.
  • Thirdly, diversify into selling a wider range of products.
  • Fourthly, revise pricing to produce a more efficient balance of the number of sales and the revenue from each sale.

2.  Decrease Expenses [cut costs]:

There are also several ways to cut costs. To apply this profit maximization option, here are four things you can do;

  • Firstly, analyze where money is being spent. Overhead is one of the biggest categories of expenses that business owners face.
  • Secondly, negotiate cheaper prices for supplies, particularly when buying in bulk.
  • Thirdly, make the manufacturing process more efficient, for example by breaking it down into individual tasks and setting up a production line system. Improving your business processes can reduce wastages financially. Always adopt time saving and production boosting technologies.
  • Fourthly, buy equipment you currently lease, or lease the ones you currently need to buy or do a hire purchase. Assessing costs here may require taking a long-term view.

5 More Easy Ways To Increase Your Business’ Profitability

The following 5 simple tips cover both profitability options discussed above depending on the peculiarity of your business situation, enjoy!

1.     Outsource

One of the biggest sources of expenditure for businesses is human resources. Because no entrepreneur can do all that is required to move their business forward, there’s always a need for talented people in every company, big or small. But for majority of small business owners, you don’t have to employ all the talents you need on full time.

No matter what type of business you are in, you probably have work that can be outsourced for a minimal fee. Look for strategic partners who can offer certain freelance or outsourcing services on a pay-as-you-go basis. Design projects, press releases and website content are all things you could stop doing in-house. Focus your full-time employees on revenue-building projects and send simple tasks out for freelancers to complete.

By so doing, this will reduce your overhead expenses and increase your profitability!

2.     Raise Your Prices

One of the easiest ways to maximize your profits is to increase your prices. Having a good business is not all about offering the lowest price. Sure, it’s what some people may be looking for, but for many, quality and customer service are equally important.

If you have a superior product, don’t shy away from charging a superior price. You may lose a few customers at first, but studies show they are likely to return for a quality product or valuable customer service options.

I discussed more about this profitability option in this unusual article; COMPETITIVE STRATEGY: How To Win The PRICE War

 Also, review your cost structure. Make sure you have a sufficient markup on your goods. When the cost of raw materials and related costs increase, the additional costs need to be included in the selling price. Reviewing your cost structure on a regular basis will help you keep track of costs that are on the rise before the cost is too great to completely include in your selling price.

3.    Find A New Energy Supplier

Energy is an expense that every company has to deal with. Trust me; I know how much I spend on power monthly. It is one of the key areas where recurring expenses flow; so if you haven’t shopped around for energy rates lately, it could be costing you.

When we ran our cybercafé business, energy or power was one of the key areas that depleted our revenues. In our first year alone, we spent over 1 million naira on energy! Just imagine if some portion of that cost could be saved and converted into profits for the company?

In developed countries and deregulated areas, businesses are able to choose their own energy suppliers, such as Reliant Energy. Many suppliers offer competitively low rates that might be better than what you’re currently paying. And if you are looking to make your business more sustainable, many suppliers offer green energy made from wind and solar resources.

The most important takeaway is that even a penny difference in energy prices can have a significant effect on your bottom line!

4.   Borrow Best Practices From Others

Your business model does not have to reinvent the wheel; you can always copy best practices from others, especially from outside your industry. Find out what’s working for your competition or similar companies and implement it in your business. There is nothing wrong with having a business model that works well, even if it is similar to another company.

Just find a way to differentiate your offering [product/service].  If a competitor is excelling with customer engagement, mimic it. If it is using different technology, look into it. Don’t be afraid to take others’ ideas and strategically mold them to fit your company.

Take a look at this unusual article for more insight; Competitive Intelligence: 12 Sure Fire Ways To Strip Your Competitions Naked!

5.   Educate Potential Customers

If people don’t know about your awesome company, then you may have a problem increasing profits. In the age of digital media, it’s just silly not to have an online presence. Create a website, join Facebook and blog about your industry. Let everyone know about your company and how great your product is.

Take it one step further by creating advertisements for your company. Choose mediums that your ideal customer would be using. TV, radio, print and online are just a few of the many places you can advertise. Once you have gained attention, work on engaging your customers. Create relationships that will keep them coming back for more.

Over To You

What other profit maximizing options have you applied in your business?

Participate by leaving your comments below, thanks!

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Tito Philips, Jnr.
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Hi! My name is Tito Philips Jnr, an unusual Nigerian that is MAD – Making A Difference. I'm the Chief Community Leader here and this is where we raise the bar of entrepreneurship. We are a TRIBE of Unusual Entrepreneurs, we are not your every day entrepreneurs who go into business to put food on the table and pay bills. For us, business is more than making ends meet [survival]. It is our means of doing what we love [passion], changing the world [purpose] and being financially rewarded for it [profit]™. Want to become ONE of us?

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View 23 Comments

23 Comments

  1. Afrizal Mustafa on April 16, 2013 9:01 am

    Great points Tito. So simple formula, yet often forgotten by start up business owners. I’ll keep them in my notes.

    Reply
    • Tito Philips, Jnr. on April 16, 2013 10:04 am

      Thanks Mustafa for the feedback, it’s true they are simple and yet often overlooked. I guess it’s the simple things that often do need our attention the most.

      Reply
  2. agraciouslife on April 16, 2013 1:50 pm

    This was very helpful. Glad to know I am already doing some of your tips. Thank you Tito. I want to read this again and again and again…

    Reply
    • Tito Philips, Jnr. on April 16, 2013 10:49 pm

      Thank you for the comment.

      Reply
  3. Emilio Peire on April 17, 2013 2:17 am

    Lots of good stuff here as usual Tito. I am often amazed at the wastage and inefficiencies that are present in outwardly successful businesses. Why wait until your business has cash flow problems or until sales are down before embarking on cost saving exercises. Strategic cost reduction, especially in purchases relating to Non-core business, is often overlooked. It should be an ongoing activity for every business, not only entrepreneurs, because it can significantly improve the bottom line.

    Reply
    • Tito Philips, Jnr. on April 17, 2013 8:35 am

      I agree with you Emilio, often the result of wastages that reduce profit come from non-core business expenditures. It pays to have a strict spending policy that helps to match every expense to only core business areas or functions.

      Robert Kiyosaki puts it so well “there are good expenses and bad expenses; good expenses makes you more money down the line [assets] and bad expenses costs you more money down the line [liabilities].”

      Thank you Emilio for the awesome comment.

      Reply
  4. Emilio Peire on April 17, 2013 2:20 am

    This message contains the correct link to my website. Apologies for the confusion.

    Reply
    • Tito Philips, Jnr. on April 17, 2013 8:26 am

      Hi Emilio,
      I have edited the URL for you. It’s correct now. Thanks

      Reply
  5. Ojobor on April 17, 2013 8:58 am

    I’v gained a lot from this write up. All the points are worth looking into, for me especially point 2 cos I’v always thought. ‘Raising your price’ isn’t a good strategy. But now I know if you ‘v quality products plus customer service and good delivery, you dnt have to panic. Thanks Tito

    Reply
    • Tito Philips, Jnr. on April 17, 2013 9:04 am

      Thanks Ojobor,

      Never compete on price, compete on VALUE!

      That’s the secret to increasing profitability by charging more. Load your products/services with so much benefits and put yourself in front of those who can’t resist those benefits. The more benefits your products/services have higher than the general market, the more price it will attract. It’s that simple, those who want more will pay for more; your task is to clearly and practically communicate your SUPERIOR value offering!

      Reply
  6. Chadrack on April 17, 2013 10:54 am

    First, congratulations for the come back. It’s a glad thing to see that nothing was lost despite the site going down for so long.

    On this article, I must say this is really an insightful post. Every strategy here is one that when applied will definitely add to the profit margin of any business.

    Thanks for sharing.

    Reply
    • Tito Philips, Jnr. on April 17, 2013 11:24 am

      Hey Chadrack,

      Thanks for the kind words, I am equally glad nothing was lost while the site was temporarily down. Thanks to great tech support and consistent backup 😉

      Glad you enjoyed the unusual article.

      Reply
  7. Ellie Sedighi on April 22, 2013 5:09 pm

    My name is Ellie Sedighi along with my partner Eddie Bardi, and we are the co-founders of an upcoming safety app, which focuses on keeping people safe. Our company is called Save A Stranger and with your help we can save millions of lives together. From one entrepreneur to another please take a moment to consider our app because it may save your life.

    Life’s toughest challenges come when we are blindsided by a tragedy that jeopardizes our well-being. Whether a car accident or an attack by a predator, we’ve all driven by slowly as we pass a horrible accident and think “I hope they’re OK,” or “I’m glad that wasn’t me or my loved ones.” But that actually could be someone you know or even love and not getting informed when tragedy strikes is just as scary as being the passenger of the accident. Knowing that people who care about you are watching over you 24/ 7 is a priceless privilege to have and that is what the SAS safety system provides.

    Our story began when a friend of mine passed away while she was the passenger in a horrible car accident. Upon impact she was badly injured, but what paramedics did not know was that her fragile body was highly allergic to latex materials. The thought of her possibly being alive today motivated me to look into safety solutions in the mobile world. I failed to find one solid all-around application that is intended to assist people when they find themselves in dire situations. I partnered with Mr. Bardi and it became our mission to devise, construct and develop a safety system that would reach the masses by using the world’s fastest growing technology platform: mobile devices.

    Unfortunately, we need to raise more money than what we have in order to finish the project. Once the life of just ONE person is saved using our product, this endeavor will be worth all of the efforts made. We know that the safety solutions Save A Stranger has created will aid in providing more quick responses to people in distress and will provide immediate vital information retrieval for those times when one is unable to communicate it themselves. Our need to raise money has led us to start a crowd funding campaign on IndieGoGo.com where we are trying so hard to spread awareness about Save A Stranger and raise the necessary funds to finish the SAS app on iPhone and Android.

    My business partner and I are reaching out to you today for your help, because you are a successful entrepreneur yourself. You started from ground zero and worked your way up, showing that you have the dedication and passion needed to succeed. We have come up with a few ideas that we would like to present to you to see if you could help join our venture.

    Please take a small part in helping fellow entrepreneurs fulfill the dream of a rewarding life in making the world a better place. I say this from the bottom of my heart that I know your contribution, whatever it may be, will make a difference in someone else’s life.

    Below you will find the links to our social media presence. Thank you for taking the time out to read my story and I really look forward to hearing back from you.

    Link: http://igg.me/at/SAS/x/2745605

    Sincerely,
    Ellie Sedighi
    CEO
    Save A Stranger Inc.

    Ellie.Sedighi@SaveAStranger.com
    W: (866) 691- 4245 Ext. 700

    C (949) 633-2154

    Reply
    • Tito Philips, Jnr. on April 22, 2013 6:09 pm

      Hi Ellie,

      Please use the contact form to get in touch with me and let me know how I can help your project.

      Thanks!

      Reply
  8. Christine on May 2, 2013 11:49 am

    Thank you for the fantastic and most generous content. once again you over deliver for your readers. I do enjoy reading your blog posts and take inspiration from them .Profit maximization is basically the process of investing time, energy, and resources into those products and services that generate the most income.

    Reply
    • Tito Philips, Jnr. on May 3, 2013 10:15 am

      Thanks a lot Christine, really appreciate the feedback!

      Reply
  9. Bizsuccess on May 4, 2013 1:02 am

    Tito Philips, i must say you are a good entrepreneur who knows what is talking about. This is a great post. Profit maximization is very important in business, because the main purpose of doing business in the first place is to get profit. So, this is a timely advice for the wise entrepreneur to utilize.

    Reply
    • Tito Philips, Jnr. on May 4, 2013 9:32 pm

      Thanks for the feedback, glad you found the article useful. Stay tuned for more.. -;

      Reply
  10. Mahesh on August 21, 2015 8:47 am

    Quite useful article
    . In a hurry to push forward many entrepreneurs forget the key word profit.

    Reply
  11. Jasmine on October 15, 2015 12:06 pm

    Another way to increase profit is to monitor your business plan, because your plan is the most accurate guide for you to achieve your goals. While monitoring your plan you also need to balanced the everyday operations and if there is a need to change the course of plan do it so. You may also consider getting a business expert like Mind Strategics Learning Consultancy where you could learn the habits and mindset of a millionaire entrepreneur.

    http://www.yourmindstrategy.com/expertprofits.html

    Reply
  12. Jasmine on October 16, 2015 1:57 pm

    In addition, you may also try adding more products to sell, the more choices the customer has the more profit you earn. And if you are giving them the best service you could give do it, customers are very important in any businesses so respect them, and soon you’ll achieve more profits and success.

    http://www.yourmindstrategy.com/expertprofits.html

    Reply
  13. Jasmine on October 18, 2015 5:25 am

    Thank you for giving us pointers on how to increase our profits, hope more articles to come. And also, please have some time to visit Mind Strategic Learning Consultancy it is also really helpful for those startups and in those still need to learn more about business profits and success.

    http://www.yourmindstrategy.com/expertprofits.html

    Reply
    • Tito Philips, Jnr. on October 18, 2015 2:59 pm

      Thanks Jasmine, will definitely checkout the site.

      Reply
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