Profit accumulation while running a startup in these challenging economic times can be extremely difficult for most entrepreneurs. However, proper planning and understanding the current market trends helps a business owner to increase their bottom line quickly. The amount that the business gets after the deduction of the expenses such as interest charges on loan and the costs of running the startup is the bottom line income. It can either be a profit or a loss depending on the company’s effectiveness in controlling their total costs.
Understanding Bottom Line Income
startups need to create a balance between its spending rates and the allocation of resources that support the growth in a firm to maintain a healthy bottom line. The startup looking to increase their bottom line focuses on minimizing any wasteful spending with the aim of acquiring income to fund its future long-term initiatives. Adverse economic situations and failed strategies, as well as competition, may lead to low-profit numbers or losses. Therefore, small businesses should consider following the five tips below to increase their bottom line income:
Advancements in technology have expanded the marketing networks for both large and small companies. Active marketing in the online networks such as YouTube, Facebook ,and LinkedIn has increased the client base for most startups. The entrepreneurs should pay attention to return on investment (ROI) rather than relying on the best deal available. Offering enticing add-on to the clients is a good way strengthening the quality of the main products.
Aim at getting the most profitable customers in the market
Getting the best customers costs less, hence the need to pay much attention to them. The best customers make up only 20% of your total visitors while the remaining 80% comprises of the low-value customers. The entrepreneur will require a lot of data analysis to identify the source of their best clients and direct their resources where they are.
Use multiple selling approaches
Trying different methods in a startup can dramatically increase its bottom line income. An entrepreneur should try automation or outsourcing rather than hiring new employees to cut on costs. Luring customers with giveaways and discounts on every purchased product may contribute to an increase in sales. A different approach allows the business owner to save costs and improve the productivity of the business entity.
Cut the Costs and Expenses
Every business spends heavily on marketing, labor, inventory, rent, and purchasing equipment. The five items are necessary, but how an entrepreneur chooses them determines how much they will spend. A startup owner should consider spending on the less expensive options when it comes to purchasing office spaces and equipment and leaving a substantial amount to cater for marketing and labor costs. Entrepreneurs can choose to outsource some experts such as a virtual bookkeeper to complete accounting tasks rather than hiring a permanent worker who comes with added costs.
Make every employee a sales representative
A small startup may not have enough resources to hire many sales representatives to market their products and drive the sales. However, the business owner may use the employees that they have to spread information about their services through emailing, one-on-one meetings, or telephone conversations. This, in turn, cuts the cost while at the same time building more networks and increasing the company’s sales.
All businesses have the ability to increase their bottom line regardless of their size. It only takes good knowledge on how to cut costs efficiently without affecting any operations. The profits in a business are an indication of effective management and control of unnecessary spending. Entrepreneurs should get different accumulated values to compare the bottom line of a company to determine its direction.
By: Lee Flynn