3 Easy Ways To Boost Your Profits
How is it possible to have a multi-million dollar business and not be making any money? Simple: Because sales are not the same thing as profits.
Everywhere you turn are businesses boasting about making six figures, seven figures, and up, but when you peek behind the scenes, are these businesses actually profitable?
If not–or even if they are–the best way to make them profitable may not be to simply make more sales. More sales can help, but only to a point. There are other key areas of your business influencing whether or not it’s profitable.
Neglecting these areas in favor of “more sales” is exactly how your business can make millions a year yet not be profitable.
Tune into this episode as James and Dean share three of these key areas, and how to use them to easily boost your profits.
First, Reduce Expenses
Here’s a little math to show you why “making more sales” in an effort to increase profits isn’t as always as effective as it seems. Let’s say you sell an item that grosses $100 per sale, but only $25 of that is profit because the rest goes to expenses and overhead. By selling two of that item instead of one, yes, your gross sales are up to $200 and profit is $50, but the percentage of profit–25%–is the same. That means the economics of your business haven’t actually changed. One way to change those economics is to first reduce expenses, so that, using our previous example, each $100 sale nets $50 in profit instead of $25. With a 50% profit per sale, you’ll get a lot more traction a lot faster than if you’d only focused on “making more sales.”
How To (Potentially) Free Up Thousands A Month
Pull up your bank and credit card statements and take a look at how many subscriptions and other products you’re buying or hanging onto “in case you might need them one day.” If you’re not even using them, odds are you can cut them and won’t even miss them. Even if it’s “just” $1,200 a year per subscription, those smaller expenses really add up when you’ve got a bunch of them. If you’re not using them, or can find an effective way to live without them, do it. You could potentially free up hundreds, if not thousands, of dollars a month.
Reduce The Most Expensive Cost
Acquiring a new customer is typically among the most expensive parts of running a business. Many businesses lose money on customer acquisition on the front-end. It’s even expected. Even so, the lower your customer acquisition cost, the more customers you can afford to bring in. The best way to lower customer acquisition costs is to test, test, and test some more. Tune in to hear examples from James and Dean on which things you should test to reduce what it costs to acquire a customer.
You’ve Got A Customer – Now What?
So you’ve put in all this time and money to acquire a customer. Your customers have more problems to solve. If you aren’t solving them, they’ll find someone who will. Yet a staggering number of business owners do NOTHING once someone becomes a customer. We’ve already established that new customers are the most expensive to acquire. Instead of doing nothing, help your one-time customer become a repeat customer. Stay in touch with them, send more offers, and get a feel for what else they need help with. To do otherwise is miss out on potentially thousands upon thousands of dollars PER CUSTOMER.
The Valuable Real Estate You’re Probably Not Using
Yes, consistent followup is a must. Yet no matter how skilled of an email marketer you are, there will always be a percentage of people who rarely, if ever, open your emails. But nearly 100% of people who buy your offers will see the thank you page. Use that valuable real estate to keep people engaged, promote another offer, send people to your blog, or even watch a video. Give people who buy from you a compelling reason to stick around, even if they never open another email from you.
Outline of This Episode
- The difference between sales and profit [6:05]
- The simplest way ever to increase profits [11:51]
- Freeing up thousands of dollars a month [21:45]
- Reduce customer acquisition costs [25:13]
- Are you completely missing this valuable real estate? [34:45]
- Deciding where to price your product [37:03]
- After you acquire a customer, do this [40:04]
Music for “Just The Tips” is titled, “Happy Happy Game Show” by Kevin MacLeod (http://incompetech.com) Licensed under Creative Commons: By Attribution 3.0 License
