Here’s How To Keep Your Small Business Profitable

South Africa is a country with massive unemployment. This is why fostering an entrepreneurial spirit and encouraging the creation of small businesses is so important. SME’s create between 65 and 70 percent of all new jobs in the South African economy annually. However, the flip side is that between 70 and 80 percent of SMEs in South Africa fail within the first five years. Why do our SMEs have such a discouraging success rate, and what can you do to keep your small business profitable?

Making more money is at the central core of every business’ philosophy – whether you’re a corporate giant or a fledgeling start-up. Small businesses have a harder time of it, mainly because they have limited budgets to start with. But increasing profitability often depends more on making lots of small changes, rather than one big one, so you don’t need huge amounts of cash. You do, however, need to be patient. It’s going to be a slow process, and you shouldn’t expect miracles.

The secret to keeping your small business profitable is actually not much of a secret at all. It’s more like common sense – which, we sadly know, is not all that common! Basically though, to be more profitable, one of two things has to happen: You have to cut costs, or you have to make more money. And hey, if you actually get both of those things right, you really will be laughing all the way to the bank.

Ways To Keep Your Small Business Profitable

Cut Costs

Depending on the nature of your business, there are several ways in which you can achieve this. You could, for example, negotiate lower raw materials and services prices with your suppliers. Try chatting with your insurer, for example, to see how you could reduce your premiums. Or speak to your Internet and mobile service providers. Perhaps they can create a package deal for you that gives you what you need but also fits your budget. You never know – if you don’t ask, you don’t get.

Salaries always eat up a big chunk of any company’s budget. If you’re a small business, you may only have a few employees, but there might still be ways in which you can reduce your staff-related costs. Perhaps one or two employees could work part-time or from home? Or maybe there are a few routine tasks you could outsource?

What about capital outlay for telecoms and general IT services? (A must-have in today’s market.) Too many SMEs get sucked into excessively high capital outlay when they most need their cash and are then tied into 3-5 year contracts to boot. Rather do your homework and source a company that can supply your start-up hardware and telecoms on a lower month-to-month basis.

Make More Money

No matter how great your product or service is, it won’t sell itself. And if you’re not making enough sales, your business is doomed to fail. This is why a well-thought-out and planned marketing strategy is vital for any business, but particularly for SMEs. You might think that when times are tight and people aren’t buying your stuff, you need to cut back on your marketing efforts. But in today’s highly competitive market,  thousands of companies are competing for the same consumer Rands. This makes marketing a necessity, not a luxury. As this article in Entrepreneur so succinctly puts it, “Marketing is muscle, not fat. Be careful about cutting it.”

In many cases, the fact that you’re not selling enough is stuff is not because people don’t want your product or service, it’s because they don’t even know it exists. Leveraging the many digital marketing opportunities provided by the Internet is one of the easiest and most cost-effective ways to introduce your offering to a wide audience of potential consumers. And you can do it all with just a single click. Websites and social media are often either free or extremely low cost, making them ideal platforms for cash-strapped start-ups.

Your customers are your best salespeople – as long as they’re happy, of course! It’s vital to make them feel valued and important – keeping a customer is easier and cheaper than recruiting a new one! This is often as simple as sending out a monthly email newsletter telling them what’s happening in your company, and giving them advanced access to specials deals and new products. And yes, the humble email is still very much alive and well! Emails  may have been around a long time, but there’s a good reason for that! Some statistics show that email marketing returns up to R500 for every R1 spent. That’s an ROI that would make even the biggest corporate bean counter sit up and take notice.

Communications Is Huge

Or perhaps we should rather say, Huge Connect Is Communications. We’re actually telecommunications in general. And we love small business. Because we used to be one ourselves. This is one of the reasons why we go above and beyond to tailor telecommunications packages for SMEs that get the job done without blowing your budget. Telephony, mobile, email marketing, Internet connectivity…if it helps you communicate, we’ve got it covered.

Let us help your small business be more profitable. Call us today.