Running an SME successfully is tough on many levels – you more often than not have to compete with ‘the big guys’. You probably also do not have massive financial reserves to fall back on, as SMEs generally find it more difficult to obtain funding. Here are a few effective strategies to help you boost your profits!
- Make sure your customers know about your company and the services/products it offers
Customers today want to be informed before they shop. They want to know exactly what they’re buying, and why they should be buying it from you rather than your competitors. You need to get their attention, and then hopefully their business as well! Therefore maintaining eye-catching and informative and user-friendly websites and social media accounts are crucial.
Also consider using lead magnets – these are special reports, white papers or checklists that are free and downloadable for customers. Lead magnets offer an effective way of reaching your customers and piquing their interest. They will inform potential customers about your products/services, while providing you a potential lead and their email address.
- Manage your inventory effectively
Ineffective inventory management is a common way in which SMEs lose money. To manage inventory efficiently is complex and time consuming, so it is advisable that you invest in one of the many good software programs available to help you do so.
In line with this it is also important that you develop a reliable database of your current customers so that you can focus on not just maintaining, but growing your relationship with them. Offer your best customers special offers and institute a reward system for new customers referred to you.
Managing your inventory well, and knowing who your customers are (and what they buy) will ensure that you have the right quantities of the right products on hand – without too much of your funds being tied up in stock just sitting in your warehouse. It will also protect you against some of your stock falling prey to obsolescence or spoilage.
- Reduce computer expenses and repairs
In is a self-evident truth that businesses would be lost without their computers! And in the case of many small SMEs, particularly home-based ones, the computer is the veritable life-line that connects the business with their customers and suppliers. But equipping a new business with the necessary computer power can be a costly business, as can be repairs and maintenance.
It is therefore advisable to do some serious shopping around to get the best you can afford at the best price. Make sure that you negotiate the best maintenance contracts that you can. Alternatively, you can rent laptops and other computer hardware. This is a good option to reduce start-up costs, as well as subsequent maintenance and support costs.
- Bear in mind that every person in your company is a potential salesperson
Every employee in your company is in a position to promote your company and generate sales. Therefore it is crucial that every single employee is well-trained, informed about your company and motivated to behave in a way that will win you customers. You need all your employees to want to work towards your SME’s success, and this starts with them feeling valued and invested.
There are many ways in which you can get your employees on board. Training is crucial, as are creating channels of communication between management and employees – and they need to know that you listen. Make sure that good ideas are implemented and acknowledged and shared among teams. Incentivizing your workforce and creating a happy workplace is not just a ‘nice’ thing to do for them, you will reap rich rewards, too.
- Establish key performance indicators, and apply them meticulously
The establishment of key performance indicators (KPIs) is essential for the long-term success of your SME, or pretty much any business for that matter. KPIs are the essential and quantifiable measures that a business applies to establish whether it is adhering to the goals it has set for itself, and whether its marketing strategies are working. Many SMEs fail due to objectives not having been set clearly enough, or pursued rigorously enough. Establishing KPIs and applying them consistently will avoid that happening.
KPIs are also used to check whether employees are meeting standards of performance and where improvements need to be made. It is important that performance goals for staff members be established in consultation with employees and that incentives are applied to encourage adherence and improvement. Ambiguity and poor leadership in this regard will impact on morale and productivity and ultimately work to the detriment of the company.
- Keep accurate daily, weekly and monthly records
The benefits of keeping accurate and detailed records about sales figures, profit margins and staff are numerous:
- It will enable you to monitor progress and pin-point problem areas in good time
- You will be able to identify financial trends in your company and sales patterns exhibited by your customers
- Ordering and keeping a close inventory will be streamlined
- It will make the compilation of financial statements and tax returns easier
- It will facilitate dealing with debtors and creditors and financial institutions
Perhaps most importantly though, it will highlight where your relationship and communication with your consumers can be improved – and that’s ultimately what the success of your SME depends on.