It seems like it was only a few days ago that we welcomed the new decade, but look at how fast the hours have turned into weeks. Now, we are at the end of February and you may be wondering about how you are going to meet your revenue goals for the first quarter and ultimately increase your profit in 2020.
Of course, I have written my best tips in my book, Profit but in this post, I will share strategies you can use to maximize your profit, not just in this quarter, but throughout 2020.
3 Strategies for Maximizing Profit in 2020
You know the saying “change is the only constant thing”? It applies to every single thing in life, especially to business.
Make steps to deliberately leverage the power of change in your business to remain preferred and top of mind for your customer
Here are a few ways you can evolve.
- Change up your look: If your products have looked the same way since 2001, maybe it’s time to consider new packaging or new flavors.
- Respond to customer’s preferences: To buttress this point, I’ll like to refer to a product that has been around since my secondary school days – Tetmosol. If you used this soap back then, you’ll, recall the harsh smell and feel on the body – obviously to show that it was truly an antiseptic soap. But check them out now, and you’ll smile at how the product has evolved in response to customer’s preference. Yes! We want medicated soap to kill germs, but we also want to feel like we’re taking care of ourselves with class and care.
Focus on the Bottom Line
Today, there are many distractions and vanity metrics you could use to distract yourself if you wanted to. Whatever you do however, focus on your bottom line. Don’t be moved by whether your product is popular or not.
Instead, make steady and progressive moves to acquire more of your target market.
Here are some factors to pay attention to:
- ECONOMIES OF SCALE: If you can roll out 10 pieces at a particular cost and within a particular time , why are you producing just 2 pieces? How can you be more efficient with the use of your resources, and leverage economies of scale as a competitive advantage?
- MARKET PENETRATION: Have you really explored the market you’re in? Are your existing customers buying enough? Are there people who need your services but haven’t purchased? You need to probe deeper to see what you need to do to increase your share of the market. I love what Nestle’s Milo did with the milo cereal. Some people may not drink milo as a beverage, but their children will love the cereal version just as much. That’s how to tap into other segments of your market.
- REVIEW EXPENSES: Examine your overheads critically. Profit is determined, not just by sales, but by how much of the revenue generated stays in your business. Many times, profit gets eroded by expenses that the business could have lived without. Review your expenses and ruthlessly cut out unnecessary costs this year.
Consider the Portfolio Strategy
The portfolio strategy means creating products that let you play profitable in the market for different socio economic classes – from the luxury end to the middle class, and the masses.
The portfolio strategy is one that we see very often with Fast Moving Consumer Goods (FMCGs) eg. Unilever producing both Knorr and Royco seasoning cubes, or FrieslandCampina WAMCO producing both PEak Milk and Three Crowns milk. Same business, different products positioned to appeal to different people.
Till date, some people still don’t know that competing products are manufactured by same brands – because they have been positioned as alternatives to each other. Creating products for every class of the market makes you garner loyalty and eventually become a HOUSEHOLD NAME.
Having an excellent product, cutting edge technology and a large market is not enough. What can you do to increase consumer connection and customer retention? That should be your focus this new year to maximize your profit in 2020.
To get ahead of your competitors, you must stay on top of your game and keep innovating. The most important thing is to not get frustrated and to stay on course. Consistency and commitment always pays, and in the end, it would be worth all of the hard work and sacrifice.
The key to a profitable business is continuous improvement. No matter how fantastic your product is, there is more you can do to stay profitable. Let me know in the comments, which of these strategies you’ll be implementing to maximize your profit this year and beyond.