Harmony: a consistent, orderly or pleasing arrangement of parts…
Much like a great piece of music, a well-run and profitable home-based or other small business is the result of the harmonious melding of a number of critical elements. Although many would argue that some degree of luck also plays its part, small business profitability often boils down to the consistent, orderly and, yes, pleasing arrangement of six key factors, all working in combination.
Here they are:
#1: Your Product or Service Meets a Real and Identifiable Need or Want
Customers only buy what they need and want, so it’s really important that whatever you’re providing meets one or both of those criteria for the target population you serve. Deciphering whether or not there is a demand for your products or services requires some very careful and honest assessment of the marketplace in which you operate. Just because you love baking doesn’t mean that the city you live in wants or needs yet another bakery. However, if what you’re baking is significantly different or superior to what’s already available, well then you might just have a shot at achieving your dream.
#2: You Have the Necessary Financial Savvy
It’s not enough to simply be good at something in order for your home-based or other small business to work. You’ve got to have the business acumen to anticipate potential financial challenges before they happen and prevent them if at all possible. Financial savvy starts with smart money-related decision-making on day one. Cash flow is and will forever be a key determinant in your potential profitability, so you can’t start out at a deficit. Make sure you save enough money before start-up to keep you in business for at least six months, if not a whole year, until you can turn a profit. Carefully consider any expenditure and whether or not it is really necessary, especially early on. Always pay your bills early and your taxes on time to avoid any problems with the government, which can be both expensive and time-consuming. And always remember that anything that doesn’t fall under the heading of revenue earned is an expense and costs your bottom line.
#3: You Set Reasonable Prices and Provide Quality In Return
Being profitable means you set a price for something that is fair by current market standards and provide a superior product or service in return. Included in that fair price is the need for you to make a profit. The difference between what it costs you to provide a product or service and what you then sell it for is the markup. How much you are able to mark up your products or services will depend on a host of things. For instance, if your closest competitor down the street begins offering his services at a lower price point, you may need to readjust your prices to remain competitive. You could also choose to maintain your current pricing and redirect your marketing efforts to ensure customers know why the service you’re offering is worth the extra money. If demand for your products is down due to the overall lagging economy, charging a little less for bulk purchases might be a good strategy, so long as it makes financial sense. The fact is that the environment in which any business owner operates is a fluid one where the only constant is change, and you need to be prepared to change right along with it.
#4: You Must Value Marketing and Sales
It’s been said many times that the true purpose of any business is to make a profit. But profits are only the result of gaining and keeping customers in sufficient enough numbers to ensure profitability, which all comes down to sales and marketing. In fact, these two disciplines are of utmost importance to any business that wants to create and sustain a real degree of profitability over time. As such, they need to be taken seriously and supported from the top down―not just with words, but with action. And let’s be honest, action means time and money. It takes time and money to develop a marketing plan for your home-based or other small business’ first year and every year thereafter. And there’s a cost associated with making sure you and your team are all on the same page when it comes to sales as well. When it comes to the sales process, there’s definitely a right and a wrong way to do things. Making sure that you and your team are following an established and proven sales protocol that covers everything from lead generation/follow-up to closing will take time if nothing else. However, smart businesspeople know that when it comes to making money these kinds of exercises are mandatory, not optional.
#5: You Put Customer Service at a Premium
Your business must be customer-driven if you want to make money. In fact, study after study has shown that a key factor in whether or not a business stays in the game is service/quality performance. There are few things as important in business as being recognized as a leader in service and satisfaction, as it directly translates into customer retention, loyalty and referrals. Leadership starts with you and your team knowing that a commitment to customer service is a core value of your organization and making sure that it pervades your business at every level from initial contact to the end-product or result. If you truly value your customers, then you must also value your employees by backing them up in their efforts to make service and satisfaction a top priority.
#6: You Don’t Hesitate to Tap New-Media Marketing Options
Podcasting, blogs, websites, autoresponders, email campaigns, opt-in mobile marketing…the list of what is now available when it comes to marketing and branding your home-based or other small business is growing all the time. Don’t hesitate to explore these exciting new-media marketing options. Although it can be a bit intimidating at first, there are all kinds of resources available online and free-of-charge that will allow you to explore what’s currently available and find out more. A simple keyword search is all it takes. The fact is that many of these more modern marketing methods are far outpacing the old standards like direct mail, couponing and print advertising in terms of both cost-effectiveness and outcomes―all of which translates into greater profitability for business owners.