How to Improve Profitability for Your Startup Business

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It can take time before your new business starts to turn a steady profit, but your business' profitability doesn't just have to do with its growth. You will also have to consider how broad of a profit margin you have with your business. Owing more each month means less of the revenue your business generates will be counted as profit. Here are a few ways to reduce your expenditures and increase your business' monthly profit margin.

Outsource Your Administrative Needs

While you do need to rely on services that don't contribute to the productivity of your business, you should pay as little for these services as possible. Hiring your own employees means paying a salary or hourly wage that's competitive enough to attract the best talents in the industry. You'll also have to provide health insurance and other employee benefits. Alternatively, outsourcing your needs to third-party services allows you to sidestep a costly hiring process and avoid paying those high salaries and benefits. You'll still get professional quality services, but you'll only be paying a modest fee for them. Consider outsourcing multiple services, such as accounting, IT, human resources, and janitorial services.

Make Use of More Tech Innovations

Using new technology in the operation of your business can be a tricky process. While some business owners suffer from not using the right tech in their organization, other business owners buy every new device or service that comes out just to seem trendy and relevant. In using new technology, you should ensure it will boost productivity or improve customer service, such as when you use CRM for SAAS startups. If the technology won't perform either of these functions, it won't help your business. Spending money on redundant or useless technology will only hurt your business profitability.

Borrow Less Funding

Another way that small business owners hurt their profit margins is by borrowing too much capital to launch their businesses. While a traditional loan is one way to fund your startup, it's not the only way you have to get the money you need. In today's digital world, there are many ways to obtain funding for your startup. You can work a side job and invest your own money, ask friends to contribute to your business, seek out angel investors, or use a crowdfunding platform to raise capital. By using multiple sources, you can get the capital you need without having to borrow from a traditional lender. This will help you launch your business with a broader profit margin and less business debt.

Go Green

As a business owner, you may have to follow environmental laws that will force you to use green technology. Instead of looking at this as a limitation, you should see this as an opportunity to earn a greater profit from your business. You can use green technology to limit your business' use of energy. Lower utility bills each month will increase your profit margin. Install LED light bulbs, a smart thermostat, and other types of smart technology to control how these resources are used. Allowing your staff to work remotely part of the time can also help you limit your business' energy consumption. Keep an eye out for new ways to reduce your business' carbon footprint as a means of staying eco-friendly and earning a greater profit.

Eliminate Redundant Steps

One of the first things you should do to increase profitability is to look at the production process or service process in your organization. Specifically, look for steps that can be eliminated or minimized to allow you to perform the same function with fewer people or less equipment. This may involve reconfiguring workspaces to make them more efficient for the purposes that they serve. It might also involve combining two workspaces so one person can perform both tasks. You should look for steps in the process that don't really contribute to productivity or don't add to the quality of customer service you provide. These are steps that can be eliminated without a disruption in the process. By dropping these steps, you'll save on the money you would otherwise spend on the resources to perform those tasks. You'll also make the entire process more efficient.

Conclusion

You should never stop looking for ways to increase the profitability of your business. If you have run out of ideas, ask your own employees for their input. You can offer an award for the best ideas to encourage participation. Trying out different ways to increase your profit margin may not always work, but some ideas will work well and help your business grow.