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10 Ways to Boost Profitability in 2010
The recession dominated business news in 2009. But sprinkled among the doom-and-gloom are small business success stories. You could be one of them in 2010.
Sound optimistic? “Sure, the recession has had a devastating effect on some,” says Gene Marks of The Marks Group, a business consulting firm near Philadelphia. “But there are other business owners, smart business owners, who have been able to make decisions during these challenging economic times that will favorably impact their profitability in the years going forward.”
Marks, a columnist for BusinessWeek.com, Forbes.com and American City Business Journals, offers these 10 tips to boost small business profitability:
1. “Outsource as much as possible,” says Marks. “You don’t have the costs of maintaining employees—health insurance, benefits, taxes.” He recommended two websites for finding freelancers: www.elance.com and www.guru.com. Popular tasks to outsource include bookkeeping, payroll administration, marketing, telemarketing, accounting, legal services and telephone services. (Marks suggests www.grasshopper.com and www.virtualpbx.com for virtual phone systems.)
2. Reduce your real estate. “It’s a good time to negotiate long-term leases and cut back on space,” says Marks. A smaller office means smaller energy bills, too.
3. Try out technologies that allow employees to work from home and enhance productivity. Check out these five remote connectivity and desktop sharing tools: www.GoToMyPC.com, www.LogMeIn.com, Windows Remote Desktop Services, www.crossloop.com and www.glance.net.
4. Consider hiring key employees. “Unemployment is still high, which is bad for workers but good for a lot of business owners,” says Marks. “You have the opportunity to bring people in house that you might not have a few years ago. They may be disgruntled with big companies and looking for smaller ones.” He adds that there’s a lot of great talent on the job market willing to work part-time or take a smaller compensation or equity in a company.
5. Use customer relationship management applications. “Smart business owners track customer activity,” says Marks. A good database of information will help you cross-sell, track marketing efforts, build customer loyalty and employ other strategies that help increase sales and profits. “There are good, inexpensive CRM applications out there,” he says. Use Outlook with Business Contact Manager that’s available with Microsoft Office, or look into www.zoho.com.
6. Join social media communities. “Social communities are becoming more popular and relevant for business owners, but it depends on being in the right community,” says Marks. He doesn’t advocate Facebook, Twitter or LinkedIn, unless your customers are there. Instead, Marks suggests sites for small business owners: www.smallbusinessonlinecommunity.com, Intuit Community or online forums hosted by the National Federation of Independent Business. “Investing in these communities is a great way to get educated, test ideas with other business owners and ask questions before spending money,” says Marks.
7. Work with a cost-containment firm. These efficiency experts will help your company cut costs. “They look at where you’re spending money—office supplies, telecommunications, purchasing, freight, your website,” says Marks. “Then, with your permission, they negotiate better deals or replace your suppliers with better priced ones.” Many cost-containment firms take half of your first-year savings and leave you the rest. If you don’t save money, they don’t get paid.
8. Pay attention to your general ledger. “It’s not exactly compelling reading, but it tells the story of your business and raises questions,” says Marks. Conduct a monthly review of your current assets, fixed assets, liabilities, revenues, expenses, etc. You will likely discover poor performing products you can weed out, excess materials you can avoid purchasing and so on. (See more budgeting and cash flow tips.)
9. Rely on flash reports. Take five minutes each day to review custom one-page reports with key data for your company. That might include cash on hand, aging receivables and overtime hours. Benchmark the data with the previous year. “You will make more profits if you look at these reports,” says Marks.
10. Keep on marketing. “Smart owners increase marketing when times are tough,” says Marks. Devise a marketing campaign, using both online and offline strategies, that targets the right prospects and customers.