Preventing your profit from slipping away

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Experts observe that after working hard to establish businesses, many entrepreneurs allow their profits to go down the drain.SIMON EJEMBI writes on ways to check this.

Financial analysts say despite working hard to establish businesses, many entrepreneurs end up battling financial crisis instead of reaping rewards for their labour. Experts say this is mostly because they fail to properly manage their profits, by watching out for “profit leaks.”

According to experts some notable actions that lead to profit leaks are:

Neglected customers

This is a common source of “profit leak”, according to experts. They explain that many small business owners make the mistake of assuming that after one visit, they have won the customer over. Therefore, they turn their focus to ‘new’ customers and neglect the ‘old’ customers who they fail to realise are prospects for other people. To avoid this, experts advise small business owners to ensure that they do not only have good customer service agents but a great customer service plan which would ensure that they keep in touch and manage business relations with their customers – new and old.

Ineffective marketing

According to experts, many small business owners fail to get their marketing strategies right. As a result they fail to have the desired impact, resulting in profit leakage. It is important that your marketing strategy stands out and is seen by your target customer base. For example, if you are running an ad campaign, it has to be in the right medium and be timed to reach your prospects. Also, you have to have a strategy for measuring the impact of that campaign. Anything short of that may mean you are letting your profit slip away.

Failure to keep promises

Many small business owners make promises that they do not have the means of keeping. Others have no evidence that they can fulfill such promises. If you are promising home delivery for your products or offering a warranty for your product, experts say there has to be proof of a delivery plan or arrangement and facilities to show that you can honour the warranty promised. Such proof as customer reviews and the likes may be useful in helping you convert your prospects to customers and retain your customers. This in turn will boost your profit and reduce leaks by preventing the funds you spend in publicising the promises you made.

Failure to effectively manage personnel

While many small businesses have great products and unique selling point, experts say they render both ineffective and allow profit leakage by failing to effectively manage staff and customers alike. Many customers have testified that they stopped patronising a business because of the attitude of workers they had to deal with and even other customers. It is not unusual for two customers to disagree or have a run-in, it is therefore important that entrepreneurs devise a strategy for dealing with such issues – no matter how spontaneous. Experts explain that this is because such a development can be a big turn off to customers. Imagine a couple who are out for a treat working into their favourite spot only to witness a big brawl, they are likely to go elsewhere and if they are thrilled with the spot they settled for, it just may mean goodbye to your place. And that is profit gone with the wind.

Not keeping customers informed

When a regular or existing customer expresses surprise that you offer a particular product or service, it is a sign that there is a leak somewhere. This is because it indicates that some of your customers may not be aware that you offer certain services and therefore patronise your competitors. To avoid this, it is advised that you should come up with a strategy to ensure that all your customers get to know exactly what products and services you offer. You can do this through fliers, paper bags, among other things. You don’t want to find out that a customer just spent millions of naira purchasing products you sell because he or she had no clue you sell them.

Not having answers for customers

The human mind is said to be inquisitive. When it comes to adopting a new product or service, it is expected to be more inquisitive. This means that customers are going to ask questions (sometimes a lot of questions) and it is important that they get answers. While answering a customer may give you an opportunity to help him or her to overcome whatever reservations they have about your service or product, it also gives you an opportunity to get valuable feedback. It is therefore not wise to get irritated on account of the fact that a customer is asking too many questions. Remember, if the customer is not interested in the product, those questions won’t arise.

 Delay in responding to enquiries

So you’ve got a great website and your contacts – phone numbers, email and Facebook and twitter address – have been made available on all your products. Your goal is for prospects and customers to be able to reach you easily. But have you really thought beyond that? What happens when a customer sends a mail or calls your office? Is there an arrangement for such a person to be attended to promptly or will it take days for you to reply. Experts say long delays following such enquiries will only force your customers to go elsewhere for assistance.

To avoid these and other leaks, experts say it is important to monitor all aspects of the transactions done by your business.

This involves keeping your long term goals in view, monitoring progress overtime in line with your objectives, managing your customers, effectively implementing integrated marketing strategies, among other things.

It is also important that you review details of running your business, keeping in view what adjustments you may have to make as the number of clients increase.

In doing this you have to make sure your workers are both efficient and effective at all times and that there is no wastage of supplies or (and) inventory.

While these may appear to be an uphill task, there are tools on the internet and gadgets that can help with these. It is, however important that in your quest to adopt technology, you go for just what your business really needs