What’s a profit margin?
The profit margin of your business is the money left over at the end of the month after funds have been allocated to:
And many other things (depending on how big your business is).
It does get more complicated than this, but the more money left over after you’ve dealt with all your business costs means more money for you.
If your business has a high-profit margin, it's booming. You’re excelling at managing business costs to create more opportunities to scale your business or go on that holiday you’ve been dreaming about.
The bottom line is that a better profit margin means superior choices for you and your business.
What’s a good profit margin?
Right now, there’s an industry with a huge profit margin in the US.
Can you guess the industry?
It’s got to do with tax and software…
Yup- tax preparation software companies with a whopping 54.3% profit margin.
It really is a no-brainer because we talking about tax and software, and as the famous saying goes by Benjamin Franklin-
In this world, nothing is certain except death and taxes.
And these days, we can guarantee that there’s also certainty in software, as the world is quickly moving online and demanding more automated systems to do everything for us.
So yes, tax preparation software companies are in high demand because people are more comfortable using software to file their taxes. After all, software makes our lives that much easier.
However, not everyone owns a software development company that deals with automating tax systems.
In that case, what’s an acceptable profit margin percentage if you're a small to medium-sized business?
It really does depend on your industry, but a ballpark percentage to work off of is usually the following:
5% net profit margin= LOW
10% net profit margin= GOOD
20% net profit margin = EXCELLENT
If your business sits at a 20% profit margin, you can give yourself a pat on the back. You’re managing the business money well, and your products and services are in demand and profitable.
However, what if you’re not sitting at the 20% mark?
How to boost your profit margin
Suppose you’re sitting on the low side of the profit margin and want to improve this. In that case, a few hacks can help you increase your profit margin percentages so that you’re left with more money at the end of the month to use as you need to.
Hack # 1: Use booking pages
We’re living in a world where we can access everything online. Business owners have the power to scale their businesses by accessing clients in different countries across the globe, instead of depending on local sales only.
That said, you need a system that empowers you to book clients online or create internal meetings using booking-based software that’s easy to use and automated. Operating booking pages instead of hiring someone to answer the phone, book your appointments and manage your meetings is critical.
Paying for booking software is more cost-effective than hiring someone who gets added to the payroll, needs a computer, and takes sick leave and holidays. Booking software doesn't take holidays and it works 24/7.
Booking-based software boosts your conversions and scales your business to a great extent. It’s built for making substantial money online and reducing hiring costs.
Hack # 2- Change your mindset
If you own your own business, you’ve certainly come across the importance of shifting your mindset around making more money. Having a healthy attitude toward capitalizing on everything in your business is imperative.
It’ll never happen if you believe you don't have a solution to increase your profit margin. However, suppose you undoubtedly know that you can change your reality and quadruple your profit margin. You’ll then see it happen in front of your eyes because you won't be afraid to fail, learn, and ultimately grow and succeed.
The essential element to this equation is breaking up a monstrous goal into baby steps. You'll succeed if you honestly believe you can hit these mini-goals to eventually get to the big one.
You own a small marketing business with a team of 10. You set a goal to increase your profit margin by 10%. Break this goal into small steps and find a way to make each part come to life. The trick is to wholly believe that this goal is attainable.
If you shift your mindset and trust your ability to improve your profit margins with an innovative strategy backing this belief system, you will undoubtedly achieve it.
A healthy and positive mindset in business is everything. If you carry this, so will your staff and clients.
Hack # 3- Remove unnecessary expenses
There are so many sneaky expenses that hide in the crevices of your business. You may not even know they’re there or have just forgotten about them.
Carry out a full audit to ascertain which expenses get the boot and which ones can stay.
What can you do to reduce your business expenses?
- Adopt virtual technology like booking-based software.
- Reassess office supply costs.
- Analyze staffing and recurring payments.
- Ditch the phone landlines.
- Create a budget that succeeds.
Whether you’re a solopreneur or have multiple staff members working for you, it's vital to audit your business expenses. Think of it as your annual spring clean. It can be hard to let go of some services if you're a hoarder. However, consider whether certain costs are needed in your business or their sole purpose is to supply you with a comfortable safety net.
If you spring clean your business expenses, you’ll increase your profit margin and deliver the goods.
Hack # 4- Don't be afraid to increase your prices
Possessing an excellent money mindset and knowing your worth will reduce the uncomfortable feeling you get when you decide to increase the prices of your products and services. It all comes down to confidence.
If you provide a client with undeniable value, they’ll pay for your services. If you go beyond what your competitors are doing, you’re already winning the race, and that’s enough proof to justify your price increase.
Naturally, your prices need to keep up with inflation and provide you with a healthy profit margin. Raising your prices will allow you to grow your business further to make better choices. When you decide to invest in different domains of your company because you now have more capital to work with, this in turn, increases your profit margin further.
Raising prices is more effective than selling more products. Absolutely bring new products and services into your biz when the time is right, but don't do it to avoid increasing your prices.
Raising your prices go hand-in-hand with the value of your products and services, and it’ll also eliminate the fluff and retain loyal customers who are happy to pay more.
How do you increase your prices without alarming your customers?
- Communicate with your customers and be transparent about the price increase.
- Give your customers a warning and be open to answering any questions from them.
- Provide a meaningful explanation for the price increase.
- Choose the most appropriate time to increase your prices.
- Make sure you enhance your deliverables to justify the price increase.
Hack # 5- Automate
Ah, the beauty of automation in this digital world!
If you’re not on this bandwagon- get on it!
An automated system like booking pages uses technology and software to perform repetitive tasks, and it frees you and your staff to undergo higher-value work.
The wonderful thing about automation is that it never sleeps, doesn't need to eat, and never asks for vacation and sick leave.
If you’re a booking-based business, automation grants fruitful gifts:
- Dealing with fewer phone calls.
- Reducing no-shows that are a BIG time-waster.
- Impress clients or partners with your professionalism.
- Gather more leads to convert into paying customers.
And all of the above increases your profit margin because it makes your business innovative and streamlined.
Automation reduces the number of humans you hire to do simple repetitive tasks that software and technology are built to do. Sure, the software has a fee attached, but certainly not the same fee as a human being.
It also gives you leverage to train your staff or yourself to upskill in more complex tasks. Complex tasks that time prohibits without automated systems.
Automated systems will increase your profit margin. The bottom line is that it opens up the element of time. You and your team can be more efficient, focusing on complex business tasks instead of mundane time wasters.
Hack # 6- Retain loyal customers
Loyal customers are the best customers; they’re usually the ones that sing your praises and pay you on time.
Did you know that only a 5% increase in customer retention can increase your company revenue by 25%?
It’s more cost-effective to nurture loyal customers than to find new ones that eat away at your advertising budget or time. Courting a lead can reduce your profit margin, so looking after the loyal guys is essential.
Moreover, these loyal and faithful customers often refer others to your products and services. Word of mouth is a powerful organic marketing tool.
Here’s how you retain these loyal customers?
- Always come across as professional and get to know your customers.
- Engage with your customers and always ask for feedback to better your products and services.
- Reward your most loyal customers to say thank you.
- Analyze the trends of leaving customers to amend any weak spots in your business.
- Make it easy for your customers to utilize your services.
- Create email marketing campaigns to develop the relationship further and add value in their lives.
- Engage with your fans on social media so that they feel heard.
- Create a content marketing strategy to develop your blog articles, videos, and podcasts to add further value.
Retain loyal customers, and your profit margin will skyrocket.
Hack # 7- Boost cashflow to reinvest back into your Biz
Experts believe you should reinvest at least 20% back into your business each month.
Reinvesting back into your business is the most intelligent way to scale. It sounds counter-intuitive, but to have significant growth in your business, you need to spend money to make money. To do this, you must ensure cash flows freely into your business.
You want to avoid taking on excess debt to reinvest back into your business. Easy cash flow coming into your business is an important marker to avoiding that unnecessary debt.
Make sure your customers pay upfront for your products and services to avoid chasing after invoices at the end of the month.
How do you do this?
Have a payment gateway integrated onto your web pages.
For example, when using the Book Like Boss booking pages, you can integrate with Stripe, PayPal, and Clover Connect. Your customers can book and pay upfront, which means more cash flow.
Boost your profit margin by using booking pages
Booking pages make you more money. Period.
It’s an easy and more powerful way to get booked. The Book Like Boss booking pages only take 17-minutes of your time to set up. You’ll make more money, come across as professional, and balloon your profit margins.
The booking pages are high converting, which means you turn leads into appointments and sales. You can sell your time, products, and services and run meetings with your team and partners.
Whether you’re a company with 1000 staff members or a solopreneur, there's a Book Like a Boss booking page for you.
The ultimate goal is to increase your profit margin to hand you the power to make better decisions in your business. Booking pages can do this.
Sign up for a free 14-day trial to experience how you can skyrocket your company's profit margin.