As a business owner, one of the things you’d want to look out for is a way to improve your business. Businesses that don’t improve only go down, and that’s a fact. Take this from someone who’s had to watch several businesses go six feet under. There are several ancillary strategies that you can use to improve your business. I’m talking marketing, risk management, competitive advantage, etc.
- Your Bottom Line and Your Top Line
- What Strategy Should a Company Adopt to Increase the Bottom Line?
- How a Great Customer Experience Can Grow Your Bottom Line
- How Marketing Contributes to the Bottom Line?
- Risks that Could Affect Your Bottom Line
The list could go on and on, but it would be useless if I didn’t touch one of the most important of them all—improving the bottom line. The bottom line of your business is your net income. It’s the last amount that remains after your expenses have been removed from your revenue. Ultimately, your bottom line provides an accurate reading of your business’ performance. Make no mistake; a poor bottom line is a precursor for disaster. Therefore, if you want to grow your business, focus on improving the bottom line.
Don’t know how to go about it?
That’s why I’m here.
Your Bottom Line and Your Top Line
The bottom line and top line are significant terms for investors and analysts; more important if you’re a business owner since you have to be both investor and an analyst. Both lines usually pop up in a company’s income statements and are constantly studied for changes. But why are these things this important?
Well, that’s because, for one, the top line refers to a company’s revenues or the total of all their sales or income. On the other hand, the bottom line is the income left after you’ve deducted expenses from the gross revenue. If you still can’t wrap your head around the idea of the bottom line, you can think of it as net earnings or net profits. That helps, right? I thought as much.
Now, here comes the important bit. You can use both lines to gauge your business’s strength, but they’re not synonymous. You can’t use the top line in place of the bottom line; they’re different and have specific applications. While the top line reveals a business’ productivity regarding sales and revenue, the bottom line shows a business’s efficiency in managing its operating costs. Ergo, improving the bottom line will boost your business considerably.
What Strategy Should a Company Adopt to Increase the Bottom Line?
Since improving the bottom line now sounds like a great idea—you’re welcome—here are some strategies a company can adopt to improve it.
It’s business, right, and making expenses is unavoidable. But it doesn’t mean that it can’t be reduced. I can guarantee you’re occupying a big-budget office or making purchases that aren’t necessary or functional to your business. If it’s not these two, it could be others. Truth is, when you sit back to analyze your income sheet, you’ll find out that there are expenses that aren’t really necessary. If you find them, cut back on them. You’d be doing your bottom line a huge favor.
Learn to Recognize Failure Quickly
This talent right here has helped many a business. Most of the great business owners you see around have a knack for this. And the good thing is, unlike other talents, it can be learned. There are certain indicators that show when an investment is going to the wall. If you recognize them, you can get out of a commitment early to keep yourself from losing a lot of money and hurting that bottom line.
Does it sound like a motivational class here, or what? Well, the truth is, your acumen is just as critical in business as it is everywhere. Sometimes, doing everything yourself isn’t necessarily a precursor to success. Of course, it’s your business. You’d know how you want it run, but you can delegate duties too; free up your plate, so you can focus and bring the best out of the important stuff.
Interact with Your Potential Customers
A word of advice: don’t take this for granted. Yeah, marketing and advertising will fetch you customers. But you know what will fetch you more? When you look for ways to interact with them personally.
Customers love it when they can feel some personality and form of sentience in a business. Automated replies and adverts don’t draw emotions or make people enamored as when you interact with them. It could be through cold calls, setting up a small space of yours at a community event, or even visiting them in their homes. While doing that, you could also ask them for referrals. That’ll fetch you some more too.
Always Be on The Lookout For Opportunities
Understandably, you’d want to stick to whatever got your business off the ground. But let me tell you something: business is dynamic. It responds to change, and it grows. Sometimes, a business model gets outdated and starts eating at your bottom line. To avoid something like this, you need to always be on the lookout for opportunities. They might be something you’re used to but haven’t tried or a spontaneous strategy. Don’t ignore them.
Also, it wouldn’t hurt to try out new opportunities even if things are still working for you.
No Permanent Pricing
Don’t forget improving the bottom line is the goal here. So, your eyes must always be on it. If it’s not meeting up with expectations, it might be time to review your prices. Take a survey. See what other people are doing. It’s not a crime to bump the price a little as long as it’s fair to your customers and helps the bottom line as well.
How a Great Customer Experience Can Grow Your Bottom Line
I don’t have to remind you how important customer experience is. It can make or mar your business. But more specifically, if you get it right, it could improve the bottom line.
For one, a great customer experience will bring customers trooping in the door and make them yours. For a business owner, there’s nothing more refreshing than having your own loyal customer base. They’ll help you succeed in the flick of a finger if you know how to play your cards right. But you don’t get to keep them if you treat them like trash. So, ensure your customer support center is perfect. I know perfection is near impossible because there are unforeseen circumstances and whatnot. But I can’t be over-the-top about this. Strive for perfection. One little mistake could cost you customers and affect your bottom line in the long run.
Besides affecting your customers directly, excellent customer experience could do a lot for your business’ reputation. I must tell you this: reputation means a lot in business and will go a long way in customer conversion and retention. If your customer experience is terrible, you’d be alarmed at just how far and fast news spreads, especially in the internet era.
However, if you get things right, your reputation will also spread far and wide, allowing certain alterations in your service, like bumping the prices up and going scot-free. You may not know this, but most customers don’t mind spending the extra buck. You just have to show them how committed you are to making them happy.
How Marketing Contributes to the Bottom Line?
Now, most businesses often downplay the role of marketing in favor of other operations like manufacturing, distribution, etc. Every time I see something like that, I take a little time to laugh to myself. You mustn’t make that mistake; not laughing to yourself, the other one. Marketing is just as important as other operations and can improve the bottom line directly and indirectly.
First of all, marketing projects and strengthens your business brand. We’ve gone over your brand’s importance and discussed how to build it. Now, marketing gets that brand out there, creating a viable connection with the customers who relate to this brand. A great marketing campaign should carry a clear statement that lets your customers know just what you’re about. There’s no need for queasiness. Be authoritative about your intent but not imperious, and your customers are sure to respond.
When it’s not selling your brand, marketing can be a means to reach out to customers and increase your customer base. Thanks to the internet, there are several channels of distribution now. You can use that to get across to customers. SMS, emails, and social media are perfect instances of these distribution channels. With a strong approach, you’ll be able to convert a great percentage of the people you interact with.
Don’t forget that you aren’t the only one going on a marketing campaign. So, you might want to ensure yours is as creative and unique as possible. It sets you out from the teeming crowd of business and pulls people to you.
These might only be a few instances, but you see how they improve the bottom line now, don’t you?
Risks that Could Affect Your Bottom Line
Now that you’re well aware of the steps to take to improve the bottom line, you should also watch out for risks that could affect it. I’m talking about risks like these:
I know this didn’t cross your mind for one second, but it happens more often than you think. You need to be prepared for lawsuits as they could come from everywhere and, sometimes, for trifles. An employee who was let go could come back at you, alleging mistreatment or something. Customers, too, can do that. And the worst thing is you don’t have to be culpable to be slammed with a lawsuit.
Lawsuits take a lot of money; I don’t need to tell you that. So, you should put measures in place to mitigate them. You could train your employees to handle any issues that might arise with your customers. It wouldn’t hurt to revisit your policies and see which ones could be deemed harmful to employees or customers. And most importantly, get liability insurance. It’s helped so many businesses get back on their feet after lawsuits.
Frankly, this is one of the deadliest threats to your bottom line. Excess spending occurs when you make investments that are far less worth the money you put in. Most instances of excess spending usually occur during marketing or hiring. Hence, it’s necessary to do proper research before financially committing to anything. Otherwise, you’d return to an emaciated bottom line at the end of the day.
Losing customers is bad for your bottom line. There’s no need to mince words about this. As much as you want to focus on your marketing campaign, brand, manufacturing, and others, your customers are the bane of your business. Losing them will have adverse effects on your bottom line. So, put effort into retaining as many customers as possible, and don’t stop trying to convert more.
Manage Your Money
As far as money is concerned, you can either spend or receive—income and expenditure. It’s as simple as that. Hence, it’s essential to keep a watchful eye on how this spending and receiving is done. It’s a bad idea to spend more than you receive. It shows up on your bottom line and, if allowed to persist, will end up as a loss.
In a nutshell, when working to improve the bottom line, you should ensure you receive more than you spend. Ultimately, when you take out the expenses from the gross revenue, you’d still be left with happy figures.