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Small Business Profits Are Increasing at Record Rates

May 21st, 2018

Now is as good a time to be a small business owner as any other. According to the National Federation of Independent Business, a record level of small businesses are reporting profit growth, and in general, optimism is soaring.

The question is: Is your small business sharing in this groundswell of earnings … and if not, how can you get a piece of the pie?

First, a quick look at the highlights of the NFIB’s findings:

  • The Small Business Optimism Index increased to a record high 104.8 in April – “the 17th consecutive month of historically high readings.”
  • 57 percent of small business owners are hiring or trying to hire.
  • 61 percent of small businesses reported capital outlays, signaling they are making investments.
  • 29 percent of small businesses say they are planning capital outlays over the next few months.

The changes to the tax law are getting some credit, but a generally growing economy and employment expansion are helping out, too. In short, small businesses have the wind at their backs.

That said, if your business isn’t recording profit growth right now – or you wish your earnings were expanding more than they are – we have a few ideas to help you shore up your bottom line.

5 Tips to Grow Your Small Business Profits

  1. Focus on Service: At the onset, putting an increased emphasis on customer service is actually going to cost more, both in terms of man-hours and the expense of adding additional services. That said, quality service not only helps companies retain customers, but add them via word of mouth once those customers are fed up with the poor service of their original provider. On top of that, businesses find that they can charge more for premium service and actually make said service part of the selling proposition. So, how do you improve your customers’ experience? Focus on things such as shortening response times to queries, customizing experiences and treating your customers with politeness and honesty.
  2. Hike Prices: It might seem like the most obvious answer, but raising your prices is hardly from the easiest change to implement. Customers don’t exactly take kindly to suddenly higher costs – especially with no reason. But there are a few ways you can effectively raise prices without scaring away your clientele. A few options? Tack on a few “extras” (that aren’t as costly as the price increase), reduce the size of a physical product and even offer occasional discounts that cancel out some (but not all) of the new price tag.
  3. Don’t Be Wasteful: Take a look at your business’ operations – how every employee spends their workday, including yourself. If every hour is spent being productive or otherwise setting the company up for success, then you’re in a good spot and you don’t have to change a thing. But sometimes employees and even business owners can, over time, find themselves mired in tasks that no longer push the business forward. Sometimes they’re just spending more time on an activity than is necessary; several financial tools, for instance, can simplify certain processes and save you a few hours a week.
  4. Go Paperless: When people think of making their office “paperless,” their thoughts on savings typically go to buying less paper. That’s a legitimate cost savings, but there’s so much more than that – including less reliance on costly office equipment (and less money spent on maintenance and repairs), as well as typically quicker workflow as a result of implementing more modern technologies. Of course, going paperless can be more difficult than it sounds, which is why you should consider paperless office consulting to understand the ins and outs of the process.
  5. Work With the Tax Man: Don’t look at the Internal Revenue Service as your enemy – look at it as a very strict but caring parent that actually wants you to succeed. OK, it’s hard to put a smiling face on the IRS, but in truth, the U.S. tax code is set up in a way that provides numerous breaks to small businesses. The problem is most business owners just don’t have the time to learn the tax code in and out, and so they scurry to figure out what deductions they can write down every March and move on, year after year. However, if you seek out professional tax assistance, you can set yourself up with a full-year game plan that will allow you take advantage of far more deductions and credits.

Are you looking for other ways to boost your earnings and take advantage of this generous environment for small businesses? Get in touch with McManamon & Co. by contacting us online or calling 440.892.9088.

 

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