How To Make More Money Without Selling More Product

kelowna accountantWhen we start to talk about making more money without selling more products, there is a suggestion that comes up too often that I fundamentally disagree with: it’s time to cut back expenses!

For better or worse, I generally make the initial assumption that people are operating their businesses efficiently, but that’s obviously not always the case. Running your business efficiently means you aren’t overstaffed and you aren’t out spending money on things that you shouldn’t be that directly affects the bottom line.

Be Realistic

The main issue I have with that analysis is that it’s very difficult to increase your bottom-line by 10% by simply reducing your costs by 10%. If you’re already running your business efficiently, reducing your costs by 10% becomes a truly difficult task. If it’s running well, changing the elements within can affect its efficiency and ultimately your bottom line.

In other words, if the soup is a hit, don’t change the recipe.

So then, if we don’t decrease our costs, how do we make more money? We need to increase our sales. That’s all well and good but as we know, it’s easier said than done.

It’s Easier To Increase Sales By 10% Than Decrease Costs

Putting the focus on increasing your sales will serve the bottom line more than focusing on how to cut costs. This is completely different than analyzing redundant processes and costs to ensure everything is running properly.

Does that mean you have to sell more product? Maybe not.

If you’re in the service industry, you have specific clients so you should be thinking about other things that those clients might want to acquire from you. Ensure you are servicing them to the best of their needs so they will be prepared to pay you more for the services you provide.

Quality Service Will Always Hold Its Value

How To Value Your Company

If you’re providing a specific product and it’s not a commodity type product, you can always add service. For example, if you specialize in selling hiking boots, those same boots can likely be purchased cheaper online or at the department store down the road but people are prepared to buy from you because they know you’re going to service them and make the boot fit perfectly so they can go on their hike without getting any blisters.

Focus on your product, service or specific widget that is the core of your business and see whether or not you can modify the pricing to increase your sales. When I say modify your pricing I mean increase the level of service to a client so they are getting more value for their money.

Don’t just increase the price because you want to increase profitability. That probably won’t work because you have competitors out there so you have to make some sort of change to your product or service so that your clients are prepared to give you additional funds for it.

Reducing Expenses Is A Fallacy

I don’t believe in reducing expenses because I believe it’s a fallacy. I really do. I believe true entrepreneurs are very aware of every dollar that they spend so to advise somebody to reduce their expenses is suggesting they haven’t been looking at their finances or expenses in the past. I don’t make that assumption, I assume that most entrepreneurs care about every dollar they make and spend.

Correct me if I’m wrong, but I think that a lot of entrepreneurs can relate to what I’m saying. Entrepreneurs don’t have a problem spending money as long as they’re getting value for the money they spend. That’s the key.

If you truly want to crack the millionaire code in business and make more money in any industry, no matter who you are, you need to understand this one simple fact: value is why people buy.

Most people, if not all, will spend money when they see value and that is key when providing a service or product. Period.

 

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