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How to increase profit without adding sales

Attracting customers, embracing change within the market, and finding ways to save money are all valuable steps business owners can take to increase profit.

Updated

4 min. read

How to increase profit without adding sales

To increase profit, a business owner will often try and grow sales, get new customers, and focus on opening new markets. But it’s not always that easy – especially if it’s difficult or expensive to obtain new customers.

Instead of pursuing new business, take these steps to increase your profit internally.

1. Lock in your best customers to increase profit

If your business has a certain threshold of sales, then look to swap poor margin customers with better paying or more profitable customers. Sales may stay the same, but you’ll make more business profit.

Sell more online or through other sales channels that don’t rely on employees, warehousing, or other fixed costs to help lower your expenses. Offer good deals to secure these low-cost customers.
Spend time and effort to keep customers that are a high percentage of sales and have high profit margins. They are already the ideal customer, so make sure they don’t leave.
Review those customers with a high percentage of sales but for some reason they have low profit margins. See if you can switch them to higher margin products, or upgrade them to higher margin services.
You’d be surprised what a very small (1- to 5-percent) price increase will do to your profit. It will increase profit and most customers won’t notice the change.

2. Stay focused on increasing profits instead of sales

Make sure all your employees understand the importance of trying to increase business profit and which products and services contribute the most to your profits.

Some tactics to help are:

Placing stickers or marking the price tags of certain products that you know have a higher margin, and then having incentives or bonuses for employees to sell those items.
Ask employees for their ideas on how to reduce costs, or complete tasks or processes faster.
Ask your accountant or financial advisor for help to ensure you’re monitoring the right indicators for your business.

“Many businesses focus on increasing sales to increase profit, forgetting that reducing costs can impact their bottom line.”

3. Increase business profit by reducing product or service input costs

Reducing direct costs can dramatically increase your profit on each sale. See if you can:

Lower the cost of goods or services sold. Negotiate lower prices with your suppliers – or shop around and look for new suppliers to quote on your business. You’ll be surprised what existing suppliers may do to keep you happy.
Get in the habit of tendering out your product supply requirements every 6 or 12 months to make sure you are paying market rates, or less.
Explore buying goods from a supplier in another country if you can’t lower the cost of goods by buying from a domestic supplier.
Meet with your current suppliers to ask what they could do to save you money. Your supplier may be able to find ways to reduce their own costs and pass the savings onto your business.

4. Reduce overhead costs to increase business profit

Many businesses focus on increasing sales to increase profit, forgetting that reducing costs can impact their bottom line. It’s important to take care not to dilute your offer to your customers. Left unchecked, expenses can creep up – but many business managers worry how cuts may disrupt operations.

Consider areas where you can safely trim costs.

Reduce payroll – Outsourcing, making use of contractors, downsizing full-time positions to part-time are all effective methods of creating savings in your payroll. Plus, you can outsource the payroll task itself, leaving you free to spend more time growing the business.
Pay a sales commission instead of salary – Put your salespeople on commission instead of a salary, so they’ll get paid only when they close a sale.
Market on a shoestring – You don’t always need a lot of money to market your business effectively if you do the basics right. There are some really effective and low-cost tactics to win new customers and keep them coming back.
Reduce production costs – Redesigning processes to eliminate duplication of effort and time, making better use of technology and automation, trimming back your product range, and increasing production runs are all effective ways to cut production costs.
Save on communications and energy – Often, a call to your phone and internet supplier to request a review of your account is all it takes to find cost savings. Taking measures such as retrofitting lighting, turning off idle machinery, programming thermostats and buying green energy will help you reduce energy costs.
Borrow instead of buying – Start a strategic alliance with another business and support each other with production resources. For example, farmers will often share employees and equipment.
Embrace technology – Your business can look to technology to help reduce costs. The world is changing rapidly and keeping up with the newest technological advancements will give you options to lower expenses.

There are many different methods you can try to increase business profit without adding sales. Some methods are easier to implement than others and won’t harm your operations, so start there. Be sure to consult with your professional advisors to see what they recommend you can do to earn more business profit.