7 Ways to Keep Your Business on a Profitable Path
What do you call a small business that watches its bottom line? Successful. Whether you're just starting out or have been in business for many years, you can benefit from these seven tips for improving profits, building assets, controlling debt, and managing cash flow.
1. Seek Outside Funding
If you've been going it solo with your own savings or credit, considergraduallybuilding funding from external resources. Sources of funding include angel investors (wealthy individuals eager to finance promising start-ups), loans and lines of credit, small business loans, and vendor financing. Many entrepreneurs seek loans from friends and family members, but there's always the potential for strained relations should your business fail. The key when it comes to borrowing is to not bite off more than you can chew.
2. Hire Cautiously
A bigger crew doesn't make the ship more seaworthy. Remember that you want yourprofits to grow, not necessarily the number of employees on your payroll. Bigger is not always better in business, so hire with caution. Consider outsourcing work to independent contractors when possible, and hire new employees only when your existing internal resources have been exhausted.
3. Develop a PR Plan
A public relations plan doesn't need to be expensive. You can achieve positive publicity for minimal cost and maximum impact using a few simple tactics. Submit a press release to local newspapers with an intriguing headline about your company, or write a letter to the editor about an issue that relates to your business. Offer to speak to civic, church and professional organizations about your area of expertise. Donate your company's products or services to volunteer groups at high-profile events. The more frequently a person sees the name of your business, the more likely they are to eventually patronize it.
4. Consider a Pay Cut
A temporary reduction in your salary could offer long-term benefits if your business is strapped for cash right now. When profits increase, you can adjust your paycheck accordingly.
5. Pinch Pennies
Don't splurge on fancy furniture or high-end gadgets and gizmos that aren't absolutely necessary for your business to function. Lease as much equipment as you can -- the payments are tax deductible and you won't be tying up precious operating cash. Check out the deals on used furniture and discount supplies. It's tempting to make your business look and feel like it's been booming for years, but plush surroundings do not guarantee profits. Focus now on producing quality products or providing a superior service -- the company jet can come later.
6. Encourage Referrals
Word-of-mouth marketing is a powerful and free tool for gaining new customers. Consider offering customers an incentive to refer others to your business (a discount or free product, perhaps). Ask satisfied customers if you can use their testimonial in an advertisement, on your Web site, or in a display at your place of business. Because people are more likely to tell someone about a bad experience with a business than a good one, make sure that every customer experiences total satisfaction when doing business with you.
7. Take Advantage of Free or Low-Cost Advice
The Service Corps of Retired Executives (SCORE) is a non-profit organization dedicated to helping small businesses succeed. It provides free online and in-person counseling, low-cost business seminars, and a wealth of resources and networking opportunities. The U.S. Small Business Administration also offers phone counseling, online information and local programs for entrepreneurs.
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