One of the biggest misconceptions in the business world lies in the fact that the best way to increase your profits is to grow your customer base. Sure, this method does work, however, what if you could increase the profitability of your already existing customer base? This way, when you eventually do come around to grow the number of your customers, the increase in profit will be even greater. With that in mind and without further ado, here are five ways to increase your profit by improving the logistics of your business.
Optimize your delivery routes
The first thing you can do in order to maximize your profit is to try and reduce the cost of delivery. The simplest way to do so is to optimize your delivery routes by filling your trucks full and performing as many deliveries possible in one go. The simplest way to do so is to invest in fleet management software and hire a fleet manager with a lot of industry experience. This way, you’re getting a massive saving without having to invest any resources, other than what you spend in order to organize this system.
Outsource long-distance delivery
Another thing worth bearing in mind is the fact that the long-voyage deliveries require so much logistics that there’s no way that your small business will be able to handle it. So, in this particular scenario, what you’ll need is a professional sea freight forwarder. This includes customs brokerage as well, which is one of the most complex steps in the process itself. Also, this will give you numerous options when it comes to delivering your goods across the globe or even ordering supplies from distant lands in order to get a much better price.
Invest in customer retention
Return customers are definitely one of the most profitable assets that any company can have. In fact, it is estimated that about 8 percent of return customers make about 40 percent of your entire profit. Other than this, a person who is satisfied with the first purchase has about 27 percent chance of returning even if you don’t make a follow-up of any kind. If you do, however, decide to invest in bringing them back, it’s vital that you know that retaining a customer costs about five times less than attracting a new customer. All in all, setting up a customer retention-oriented model is definitely a logistical improvement you need.
The concept of going green can definitely be described as a clear and undeniable win-win scenario. Why? Well, because it implies that you’re using less energy and fewer supplies while getting the same performance. Due to the fact that these extra supplies and bill payments tend to hurt your profit, what you’re getting by going green is a direct income surplus. In order to achieve this, you can invest in energy-friendly appliances, go paperless and even opt for digital agencies that offer green hosting.
Maximize your cash flow
Finally, you need to keep in mind the fact that a profitable company always keeps a healthy cash flow. There will be moments where even though you’re making money on paper, there’s a massive shortage of cash. The problem is even greater than it may seem to you at the moment, seeing as how this cash is reserved for operational expenses. We’re talking about the lease on your office space, employee salaries, payments to supplier and other vital projects. There are many different methods in which your cash flow can be improved, ranging from raising another loan all the way to selling invoices.
The best thing about the above-listed tips is the fact that they create a system that passively increases your company’s profit. In other words, you make the right decision once and get to reap the benefits of this decision for years and years to come. One more thing worth bearing in mind is the scalability of these solutions, which is definitely a feature that you’re looking for when upgrading your business model.