11 ways to increase business profits

Focus on income, expenses and sales to widen the gap between revenue and costs.

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Making sure your business is profitable and steadily increasing is key to growing at the pace you’ve outlined in your business plan and meeting your marketing goals. If your revenue sheet has flatlined or taken a dip, consider some of these tips to boost your profits.

How to increase business profits

The key to boosting profits is focusing on the elements that drive profits — namely income, expenses and sales. Following some or all of these steps can help you make sure you have all of these elements covered:

1. Run a price audit

If you’re charging too much or too little, you could be missing out on customers or not bringing in as much as you could. Underpricing your products or services can also make people suspicious of the quality of your product.

Make sure you’re hitting the sweet spot with your prices by asking the following two questions:

  • How much are customers willing to pay? Run research on how much your target audience would pay for the product or service you sell. This could include doing a survey, running a focus group or other strategies you used when writing your marketing plan.
  • What are your competitors charging? Refresh your competitor research to make sure you aren’t a huge outlier in the market. If you are, make sure that price difference is something the customer can easily justify.

2. Calculate your exact costs

Sit down and calculate the total cost of running your businesses, including fixed and variable expenses. If you don’t have an accounting department, consider hiring a freelancer to run your numbers so you get an estimate that is as accurate as possible. Weigh this against your revenue to make sure your prices are high enough, and use it as a starting point to cut down on costs or increase your sales.

3. Streamline and change up procedures

Take a look at your business costs to determine what can be streamlined and what should stay the same. Consider factors like whether you’re spending more time or resources than necessary on one area, combining teams and strengthening channels of communication to make it more efficient. Cut out redundancies when possible.

Consider asking your employees in an anonymous survey where they think time is being wasted, since they’ll have a different perspective than management.

4. Switch up suppliers

Research other companies in your supply chain — like vendors and manufacturers — to look for a better deal. If you find one, consider switching to a new company.

And don’t be afraid to negotiate with a new company, either. Ask about discounts or a reduced deal before you sign any paperwork.

5. Outsource when you can

Outsourcing is another strategy you can use to lower your business costs. It can often prove to be much cheaper than hiring full-time employees to complete certain tasks. By finding new ways to reduce your business expenses, you can price your products competitively while increasing sales and profits.

6. Negotiate a better deal

Don’t be afraid to try to negotiate for lower costs with your suppliers or manufacturers on the goods you plan to later resell. Lowering the cost of goods from suppliers will not only increase your net profit, but can also enable you to possibly sell your products at a lower price. This can increase demand for your product and services, which can improve business for you.

7. Invest in employee happiness

Hiring and training new employees can often be an expensive, time-consuming process. But it’s important to have a good working relationship with your team members — this includes encouraging them to share ideas for the business, coaching them in areas that they’re struggling and asking questions to find out if they’re satisfied in their work.

Constantly improving your company culture can not only lower the costs of frequently employing new people, but also inspire loyalty among your employees to go the extra mile.

8. Open new distribution channels

It goes without saying that increasing your sales is a sure-fire way to increase your business profits. In order to increase sales, you should try to open up new distribution channels if possible. For example, a lot of consumers are now shopping through online websites as opposed to in stores.

9. Incentivize efficiency

One way to increase the strength of your sales force is to offer your employees higher commissions and incentives for bringing in new sales. Bonuses for exceeding goals can also motivate other team members to carry more than their weight. Or make it fun by having an annual awards ceremony that comes with small prizes tied to revenue.

10. Rely on analytics

Increasing your sales goes hand in hand with managing your marketing costs. Use data analytic tools to understand trends among your customers and implement marketing strategies that cater directly to consumer demand. If you use marketing campaigns for paid advertisements, identify what’s working and focus more of your resources on that, while eliminating campaigns that don’t turn a profit.

11. Continually look for areas to expand

Growth isn’t just for new businesses and startups. Regularly assess whether your bottom line is cramped because you don’t have the resources to keep up with demand.

Also, consider expanding into new areas if you find a new niche in your market that the competition hasn’t snatched up yet. It might even be worth taking out a business loan to fund the upfront cost — just make sure the return on investment makes it worth it.

Compare business loans

Updated January 19th, 2020
Name Product Filter Values Min. Amount Max. Amount Requirements
LoanBuilder, A PayPal Service Business Loans
$5,000
$500,000
Annual business revenue of at least $42,000, at least 9 months in business, personal credit score of 550+.
Customizable loans with no origination fee for business owners in a hurry.
OnDeck Small Business Loans
$5,000
$500,000
600+ personal credit score, 1+ years in business, $100,000+ annual revenue
A leading online business lender offering flexible financing at competitive fixed rates.
Efundex long-term business loans
$50,000
$1,000,000
2+ years in business, 620+ credit score, not a sole proprietorship or nonprofit, strong financial history
Financing for high-risk industries with transparent rates and terms.
Sheer Funding Business Loans
$5,000
$2,000,000
6+ months in business, 550+ credit score, $150,000+ annual revenue, eligible industry
Multiple financing options available for business owners with less-than-perfect credit scores.
National Business Capital Business Loans
$10,000
$5,000,000
Your company must have been in business for at least 6 months and have an annual revenue of at least $100,000.
Get a large business loan to cover your financing needs, no matter what the purpose is. Startups welcome with 680+ credit score.
Kabbage Small Business Line of Credit
$500
$250,000
1+ years in business, $50,000+ annual revenue or $4,200+ monthly revenue over last 3 months
A simple, convenient online application could securely get the funds you need to grow your business.
LendingTree Business Loans
Varies by lender and type of financing
Varies by lender and type of financing
Varies by lender, but many require good personal credit, minimum annual revenue and minimum time in business
Multiple business financing options in one place including: small business loans, lines of credit, SBA loans, equipment financing and more.
Lendio Business Loan Marketplace
$500
$5,000,000
Must operate a business in the US or Canada, have a business bank account and have a personal credit score of 560+.
Submit one simple application to potentially get offers from a network of over 75 legit business lenders.
Main Street Finance Group Business Loans
$5,000
$1,000,000
1+ years in business, $10,000+ monthly revenue
Apply online and get approved within hours with minimal paperwork. Multiple financing options available.
BlueVine Term Loan
$5,000
$250,000
6+ months in business, $100,000+ annual revenue, 600+ credit score, not based in North Dakota or South Dakota
Get a predictable business loan with a fixed weekly rate.
SmartBiz SBA Loans
$30,000
$5,000,000
650+ personal credit score, US citizen or permanent resident, 2+ years in business, $50,000+ annual revenue, no outstanding tax liens, no bankruptcies or foreclosures in past 3 years
Get funding for your small business with a government-backed loan and extended repayment terms.
Fundbox Invoice Financing and Line of Credit
$1,000
$100,000
You must have an established business with regular monthly revenue.
Get flat rate, short-term financing based on the financial health of your business, not your credit score.
Square Capital Business Loans
$500
$100,000
Your business must use Square to process payments, you must process at least one payment a week, your annual business revenue must be at least $10,000.
Business financing of up to $100,000, comes with daily repayments.
Chase Business Term Loans
$5,000
$500,000
Hold a Chase business checking account, have a realistic business plan and visit a Chase location in person.
This popular bank offers large amounts to support your business’s bottom line.
QuickBooks Capital Business Loans
$1,000
$35,000
FICO score 580+, $45,000+ in revenue for the previous year, no bankruptcies in the past 2 years
With a simple online application form, you could get funding in as little as one business day.

Compare up to 4 providers

Bottom line

Cutting back on expenses, adjusting prices and upping your sales are key to increasing profit. Make a habit of regularly assessing where you can improve, streamline and expand to make sure you’re continuing to bring in the highest revenue you can.

You can learn more about how to keep your revenue reports up and to the right with our guide to keeping a positive cash flow. Or check out our guide to business loans to learn how to make a smart choice when you need financing.

Need financing?

Our top pick: LoanBuilder, A PayPal Service Business Loans

  • Min. Loan Amount: $5,000
  • Max. Loan Amount: $500,000
  • Requirements: Annual business revenue of at least $42,000, at least 9 months in business, personal credit score of 550+.
  • Fast funding
  • Simple online application

Our top pick: LoanBuilder, A PayPal Service Business Loans

Customizable loans with no origination fee for business owners in a hurry.

  • Min. Loan Amount: $5,000
  • Max. Loan Amount: $500,000
  • Requirements: Annual business revenue of at least $42,000, at least 9 months in business, personal credit score of 550+.
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