No one said running a business was easy. Like being a parent, you are responsible for every iterance of its creation. You need to be the dreamer, you need to be the manager, the accountant, the salesperson, the IT guy – you have to be it all, or so you think. Starting a new business is incredibly brave for this very reason. You are going off on your own to accomplish your dreams, and when you first start out, every penny counts.
What you might not realize when you go in is that, whether you are big or small, having a narrow profit margin does not give you a lot of leeway. Operating with a 5% or less profit margin can mean you keep going, but it doesn’t provide a lot in terms of reinvestment or expansion (especially when you are first starting out). Cheapening your product, hiring less staff than you need, and increasing costs, however, are not the way to go. Instead, operate under the principles of lean management, getting help, and increase your customer base:
Lean Management
Lean management is a principle that was created by a car manufacturer in the 1950s. Essentially lean management’s goal is to reduce unnecessary processes to increase profit. If your employees aren’t wasting time finding what they need, then that’s time you aren’t paying for, and so on. This concept also applies to finding the sweet spot in production, so that you waste less, but don’t overproduce. To achieve lean management, go through your office and clean it up, making it orderly and systematic. This includes your company’s files – data loss is very common and can interrupt if not derail your business operations.
Getting Help
It is not just okay to accept help; it is a market of a great leader. No one expects you to know everything and no one expects you to be good at everything. To improve your chances of keeping afloat then, make sure to hire a professional who offers services for small business consulting, meaning that they can regulate and keep an eye on your accounts, while you can focus on other areas of your business. By hiring inside help, you’re bringing in the knowledge of professionals who are experiences in vital elements of your business.
Increasing Your Customers
Lowering your costs through lean management and, more importantly, by learning what to do in order to run effectively can help lower your costs. This next step involves increasing your revenue. To do that, you need to increase your customer base. As a small, local business, you have a lot of power in your community, so make better use of it. Join community groups, sponsor events, hold your own charity event, and get out there. Local news agencies love feel-good stories and they love to have the latest scoop on new events in your neighborhood, so organize something like a charity run and give them a press release. This will improve your local visibility, and will also improve your SEO standing.
Improving your profit margin may seem difficult, but by reducing costs by cutting out inefficiencies in your office and by increasing your loyal customer base through key local marketing tactics, you can improve your profit margins the right way.
