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4 Tips And Tricks To Boost Your Small Business’s Profitability

4 Tips And Tricks To Boost Your Small Business’s Profitability

The goal of running a business, whether big or small, is to earn profits. If you’re only burning cash, but no steady source of money, your business isn’t profitable. In the long run, your business may go bankrupt as you may have used all of your finances.  

While a small business or startup may not make a lot of money at an early stage, it should become profitable as times go by. Your business should then sustain its operations while having more cash flow for it to grow or develop. And, you can do this by considering the following tips and tricks: 

1. Reduce Expenses 

Profitability refers to the metric that identifies the scope of the business’s profit related to its size. This means the company’s failure or success is measured in terms of the business’s efficiency. Or, you can also measure profitability through net margins and gross. In short, you can increase your profits by increasing your net margins, and you can do so by reducing your expenses, such as the following:  

  • Overhead Costs: These expenses include utilities, insurance, rent, and other indirect costs needed to run your business. These expenses may not be linked to creating your services or products, but they’re required to support your business. And, in time, the overhead costs can drain your finances since you need to pay for them whether you’re in a loss or profit position. That’s why reducing them can help reduce losses and add profitability to your business.  
  • Overall Direct Costs: As the name suggests, these expenses are the ones you spend on creating your services or products. For instance, if you’re selling furniture, then the lumber is one of your direct expenses. And, these expenses can also impact your gross margin, so reducing them can also increase your profitability.  

You can do so by negotiating discounts or prices for any purchase required to make your product or service. Or, you may want to ask help from lending institutions to finance your equipment instead of using your cash. That way, you still have spare money, which you can use in times of emergencies or unexpected business expenses. 

  • Inventory: This refers to the stocks you need to meet customer demands. However, overstocking can cost you more, especially if old stockpiles are no longer what your customers want. As a result, you may spend more on storage and maintenance. Thus, it may be best to control your inventory so that you can reduce these costs. Moreover, having enough inventory will prevent having obsolete stocks, which may become a waste if not sold. 

2. Implement Online Transactions 

Aside from reducing your expenses, you also need to level up by integrating online transactions into your business. People now enjoy the convenience of online shopping, so it’s an excellent strategy to boost your business’s profitability. For instance, add an online delivery service to your brick-and-mortar restaurant. By doing so, you can have more sales since customers no longer need to dine in to enjoy your recipes.  

By making your business available online, you can also use digital marketing for advertising your business to reach more potential customers. It’s an easy and effective way to market your business since most consumers nowadays spend more time online.  

Then, link your business website where they can purchase your products or services. Here, you can accept online payments to make their shopping experience more convenient.  

3. Maximize Your Cash Flow  

Another way to increase your business’s profitability is to maximize your cash flow. This means upgrading your service offerings so that you can achieve a stable source of earnings. For instance, you may want to offer a discounted 15-hour retainer plan at USD$75 per hour instead of a one-time service contract at USD$100 per hour. It may seem like having a lesser sale, but you’re getting more since your customer is in a longer-term contract, which provides higher sales in the total bill.  

Or, if you offer products, you may want to offer add-ons at a discounted total price rather than making them purchase only one product. For instance, one t-shirt may cost USD$5, while buying two tees will only be worth USD$8. You may have sold the tees at a lesser price, but that’s better because your inventory moves faster.  

4. Remove Unprofitable Services And Products 

If you’ve been doing business for months, you must know which ones sell and those that don’t give value. You can do this by tracking your records. After identifying the most profitable services or products, you must focus on them.  

By doing such, you’ll avoid wasting time and effort creating, offering, and marketing unprofitable products or services. If the latter ones aren’t making any sales, then it may be best to remove them.  

This is where stock control or inventory reduction comes into play when you’re selling physical products. If you’ve created or purchased more than necessary, and your market doesn’t buy them, it becomes a loss on your part.  


Whether you’re offering products or services, the tips and tricks above may help you boost your small business’s profitability. When you leverage your profitability, you can earn more and expand your business. Don’t settle for less, but aim for business growth by scaling up your profitability.