One of the most sobering facts about small businesses is that the majority fail within the first year. Often, that failure is due to a lack of profitability. Entrepreneurs pour all their resources into opening a business, without understanding some of the principles that can make a break the bottom line.
Achieving profitability in the early stages of a small business can be a challenge, but if you follow these tips, you’ll have a better chance of meeting that goal.
1. Use the Right Customer Management and Appointment System
Simply put, there is absolutely no reason that any service-based business should be using an old-fashioned appointment book to keep track of bookings. For example, modern software can replace salon appointments books or other paper-based scheduling systems for small salons and spas, making the process of managing customer appointments easier, more convenient, and increasing profits.
Allowing your customers to book and prepay for appointments online saves time and increases the likelihood of rebooking, especially since most systems can automatically send a reminder text or email. This reduces no-shows, and the amount of time your staff must spend on reminder calls. An electronic system can also interface more easily with your customer relationship management software, making it easier for you to stay in contact with customers.
2. Avoid ‘Specials’
When business is slow, it can be tempting to offer heavily discounted specials on your products or services. However, if you continually offer special deals, you’re likely to develop a reputation for always running specials, and only attract customers when you have a special offer. In addition, some people will come in only to take advantage of a special, and never return. Instead, consider offering deals to customers who have already walked through the door; for example, a “buy one get one half off” deal on specific products. You won’t lose money, and you’ll build a more loyal following.
3. Provide Sales Training
Even in a service-oriented business, product sales can be as much as three times more profitable than services — but that’s only if you actually sell the products. Simply placing some shelves with products in the waiting or checkout area isn’t adequate. But even if you run a shop or eatery and selling products is your business, you need to teach your staff how to sell. Teach them how to listen to customers and determine their needs, and make recommendations for products that will meet those needs. Your staff should halve in-depth knowledge of all your products so they can answer questions, explain why customers need the products, and convince them to buy. In addition to training, create sales incentives that will encourage your team to focus on selling.
4. Focus on Your Bread and Butter
One piece of advice that many entrepreneurs hear is “do one thing, and do it well.” And it’s true: When you think about some of the most successful businesses, they are generally focused on giving their customers the best of a specific product or service. That doesn’t mean that you have to be old-fashioned, or ignore trends and changes in customer desires. However, it does mean that you need to be selective in what you choose to offer, and identify where your business is bringing in most of its income. That’s your bread and butter, and where you should focus most of your attention.
5. Use Social Media Effectively
Social media is a powerful marketing tool. Depending on the type of business you’re running, different platforms can be more effective than others. For example, sites like Pinterest and Instagram are ideal for businesses with plenty of visual content, such as hair salons, restaurants, and florists. You should always run campaigns on Facebook and Twitter as well, though, to build more engagement with your business. Try rewarding customers who check in or tag your business in their posts with an exclusive discount or gift.
6. Create an Experience
Whether you have a gift shop, a bookstore, a salon, or any other type of business, creating a pleasant experience can be the ticket to repeat business. Many auto repair shops, for instance, have created comfortable waiting areas with refreshments, Wi-Fi, and even tablets for customers to use while their wait for their vehicle. What could be an unproductive and frustrating chore because a pleasant respite. Or create some fun: During the holidays, for example, a gift shop can create a photo area with a backdrop and props for customers to take fun photos — and as a bonus, they are likely to tag your business, giving you more exposure. Brainstorm ways that you can make doing business with you pleasant and a great experience, and customers will keep coming back for more.
7. Create Loyalty Programs
Finally, speaking of coming back, encourage your clients to return again and again by offering loyalty programs. Offering a discount or a gift card after a certain number of visits or when they hit a certain spending level can help build loyalty encourage clients to return. However you structure your loyalty program, offer something of value that will keep people coming back.
Running a successful startup business is about more than just offering great services and competitive prices. You need to address the business side of things too, and understand your audience. When you do, you will be profitable in your first year — and well beyond.