Increasing Your Business Profit

In difficult economic times such as the ones we are living in today, every business owner is scrambling for a nickel of profit here and there. The honest truth on the other side is that some businesses are not really as concerned about profit as they are about staying afloat. Every day as I drive around my neighborhood I am surprised to find out that some of my favorite stores are closing. The truth is, we are in challenging business times. On the other side of the truth is the fact that some businesses have managed to stay alive and they are picking up clients from the their defunct neighbors. How have these surviving businesses managed to stay afloat?

There are three ways to increase your business profit and each one of these comes with consequences. Before you decide which one you intend to utilize, you need to weigh the options and make sure you can sustain your profitability plans.

One of the ways to increase your bottom line is to reduce the weight at the bottom. And you do this by cutting business costs. Business costs come in different forms but we will talk about the three big boys: the cost of labor, the cost of inventory, and the cost marketing.

1. The cost of Labor: I am realizing that when it comes to cutting costs most businesses rush to the cost of labor. They start by either reducing the number of employees or reducing the number of hours for each employee. This is the most understood traditional way of cutting costs. In today's highly technological and outsourced world, this could look convenient. What most businesses do not realize is that the human touch is all there is to a business. Businesses without human beings are static and stale organizations without life. As convenient as cutting labor costs may be, it is not the first place a business should run to.

2. The cost of Inventory: Every business has inventory. Some argue that service industries do not have inventory. Much as this is true in theory, it is not true logically. Every business has some inventory of some kind. Cutting the cost of inventory means cutting profits from under your suppliers. What is going to happen here is that as more suppliers are forced to consider less and less prices for their products, they will either compromise their quality both of delivery and production, or they will go out of business altogether. To force your supplier to reduce costs is to step at the source of your stream.

3. The cost of Marketing: One of my clients came to me the other day and told me, "Amon, I do not have any more money to continue running my marketing program". What I actually heard him say was, "Amon, I am ready to die". Marketing is the life and blood of any business. No customers, no profit. In difficulties times such as the ones we are in right now, most businesses start to cut their marketing budget. The truth is, there are so many businesses closing their doors right now and customers are scrambling for their next favorite. Customers are left as orphans and they are looking around for someone to adopt them. This could be the best time to double your business-marketing budget.

How do you increase your profits without cutting your labor, inventory and marketing costs?

Email me at amonikas@yahoo.fr for some answers.

Coupon Junkie

Yes I am a coupon junkie. I love saving money. Pay less for more sounds so attractive. So I save every coupon I can lay my hands on. At this one store, I found out that I had saved close to 40% of my cost just by using coupons. One may think that merchants make coupons to give free money to customers. That's not true. Coupons are actually made to increase profits for merchants. Yes. But they are made in such a way that both sides win.

But first, what do coupons do for the merchant?

First, coupons will motivate buyers. You may not have plans to spend that $1,000 in your pocket. But the moment you see that your dream laptop computer is now 40% off, the temptation is planted and before you know, you are walking that buyer lane again to take advantage of the discount. And there goes your $1,000. The thing is, you will never know how much that 40% is worth to the merchant.

Secondly, a store that issues coupons tends to get more exposure. Coupon junkies are always looking online and going through the store's catalog looking for coupons. This constant placement of the store's brand in the eyes of its customers increases brand equity.

In the end, coupons are a win on both sides. But the customer spends less time calculating the benefits than the merchant does. And yes, the merchant sometimes is more equal than the customer.

Cutting it short

It’s been long since I last blogged. I have been busy undergoing a long and laborious training for my new business. I finally managed to get away from everything and concentrate on what I love doing. Since I started getting interested in payment systems back in 2001, I have never stopped to wonder what it would look like if a company existed with a mission to help merchants; to be on the merchants' side.

It has been a good ride working with various merchants the last few days. I have been helping merchants to interpret their credit card statements, calculate their actual processing fees, and I could see their eyes opening wide as they discovered that they were actually being lied to. This one client I worked with had his credit card processing rate stated as 1.65%. A closer look at the statement revealed unbelievable hidden fees. The total? 3.8% for every transaction. It was a sad discovery. As soon as I left, the merchant was on the phone grilling his credit card processing company. I am yet to hear what happened.

This job has been very rewarding. Naturally I like helping people but I had never done it as a career. It sure feels so good to help and at the same time earn a living from doing so.

To all my clients I say, “thank you for giving me a chance to serve you”

New Beginnings

Hey y'all my friends. Just wanted to let you know that I will be blogging a lot these days about business, the economy, and cutting business costs. If this is not your piece of bread, then I suggest you reconsider your RSS. Otherwise, have fun.