In this article are 5 ways to increase turnover and increase your profit.
The distinction between the two is important. Which do you really want?
Respect this old saying… turnover is vanity, profit is sanity, but cash is king.
In my book Double Your Business, while the goal is to increase turnover and profit, there’s a wider payoff too.
You have the opportunity to create a much better life for yourself, your staff, family and even contribute more to your community when you earn more.
Introduction: Increase Turnover or Increase Profit?
From a financial perspective, being in business is about making money.
Turnover is not making money – it’s just the amount that people pay you.
There are plenty of £1m businesses that make no profit at all. Yet so many people in business really want to reach £1m turnover.
Be careful it’s not a hollow goal…
On the flip side, there are businesses with £250k sales turnover that make over £100k profit. That’s the kind of business that’s worth having.
The higher the margin, the more profit you’ll make. So, my suggestion if your margins are not industry leading would be to start by considering how to increase profit first, before growing sales.
Imagine what a more efficient business means. You get higher productivity.
This translates into more profit from every sale. And that’s not all…
Higher productivity means you make fewer mistakes, create less waste, increase quality.
This leads to increased customer satisfaction while costing less.
You can bank the extra profit, or re-invest it to win more customers and increase your sales turnover. It’s a truly virtuous circle.
Your competitors won’t know what hit them.
And your bank balance will grow faster than ever. Higher efficiency transforms your business like nothing else – it really is mind-blowing.
So instead of simply aiming to increase turnover, ask yourself this question first:
Do you want more sales turnover, or do you want more bottom-line profit?
Just remember that more turnover does not automatically increase profit – a small unprofitable business become a bigger unprofitable business.
While it feeds the ego to say “I run a £1m business”, it feeds the family more if you take £200K profits.
I hope that now you don’t just want to increase turnover!
Here are 5 powerful methods to dramatically increase your turnover AND profits…
1. Make More With Every Sale
Thoughts always move to new customer acquisition when thinking about increasing annual turnover. If you’ve not already got a proven marketing method, it’s probably the last place to go due to the costs.
A great place to start is by maximising the value of every sale.
If you can sell 20% more products and services to every customer, you automatically increase annual turnover by 20% too. Elegantly simple.
If there’s nothing obvious that you can sell, you’ll have to get creative.
Have a bit of a brainstorming session and come up with ideas of what you can sell.
Remember that it doesn’t need to be something you sell, either. It could be a referral fee to another company. That’s exactly how financial advisors, amongst others, make all of their money, after all.
2. Increase Turnover Quickly by Increasing Your Prices
There’s a strange phenomenon I’ve noticed with many businesses.
They work really hard to provide the best possible service, out-doing all of their local competitors.
And then for some reason not charging as if they’re the best!
If you charge less than your competitors but give a better service, you’re too cheap. Be proud of the quality of service you provide.
Increasing price alone is often enough to make a profound difference to margins too.
It really is the simplest of all the ways to increase profit and for good quality businesses, it’s a breeze to do, too.
3. Create a referral system
If you work with great customers and want to get more just like them, a referral system can be a great way to bring in a steady flow of new ones.
They say that birds of a feather flock together. Your best customers will know people just like themselves – so make it easy for them to make the introduction for you.
The type of referral system you create will depend upon the relationship you have with your clients.
The big question that generally arises with referral schemes is what to offer.
It pays to think carefully about how you might structure this for your customers because it’s easy to cause offence.
For example, some people will love you so much that they’ll happily make introductions for you without reward. The service you provide is enough. An offer to pay a referral fee may feel dirty to them and offend.
Perhaps the easiest way is what I call the 50/50 deal. You reward your client and the person they introduce equally. It feels nice to each of them and is genuinely a nice thing to do.
4. Convert More Sales Into Customers to Increase Turnover
Start tracking your sales statistics. Most people don’t do this accurately.
By sales statistics, I mean tracking the number of leads, enquiries, and quotes that you have, compared to the number of sales you make from them.
Increasing the ratio of sales to leads is perfectly possible with a focus on high-performance selling.
Sales skills are not something that you’re born with, but something you learn.
Most people just busk their way through, not learning to sell, but using whatever natural abilities of influence that they have.
An experienced salesperson is not necessarily a skilled one. The most capable salespeople are the most skilled. They don’t just rely upon their experience, wits and talents.
If you have salespeople, are they trained or just experienced?
If you are the salesperson for your business, are you trained?
When you make more sales without more enquiries, your turnover increases at almost no cost.
5. Install A Proper Lead Generation System
Marketing. A word to put fear into the wallet of the most experienced business owner.
Too often, marketing is writing an open cheque in the hope that you’ll get some sales in return.
What you want is a lead generation system.
A lead generation system is an engineered approach to marketing. Each step is built according to a set of proven principles. It is thoroughly tested and produces new customers reliably for you.
The figure to control with your lead generation system is the Return On Ad Spend – also known as the ROAS. This is simply the sales you make divided by the advertising spend.
So if you spent £1,000 on advertising and produced £10,000 in sales, that would be a 10x Return On Ad Spend. If it produced £3,000 it would be a 3x ROAS.
Of course, that may not be profitable – so also closely watch the profit margin to make sure your marketing will increase profit and increase turnover.
If you’ve found this post useful, you may also want to read How To Increase Profit.