While running a service business can be incredibly fulfilling, ensuring it is profitable is no mean feat. Managing customers and pricing can be challenging, especially in the current economic climate. Thankfully, there are a number of strategies that can be implemented in order to increase profitability.
Every business is different, and while certain methods may work for one business, they will not work for others. It is important to keep a customer-centric approach and not compromise on quality in order to keep client satisfaction, repeat custom, and referrals at a high rate.
Sell complementary products
Dependent on the service you are offering, the introduction of retail can generate considerable profit. Allowing your customers to purchase products that complement the services you provide can be both profitable for you and convenient for your clients.
For example, if you are a hairdresser, allowing your clients the opportunity to purchase necessary hair toner directly from your salon means they do not have to go elsewhere to buy products, plus it will improve and extend the quality of the treatment they have received.
If you are unsure of what products to offer, speak to your customers to gain better insight into what they are currently buying from elsewhere and what they would benefit from buying directly from you.
Assess overheads
Overheads, when not closely managed, can quickly become a drain on both revenue and profit. Therefore, ensuring that you are regularly assessing the overheads of your service business is an effective way to ensure they are not higher than necessary.
Start by calculating all your current overhead costs. This should include but is not limited to utilities, rent, and insurance.
Once you have a clearer idea of exactly how much you are spending, you can then begin to work out if there are any areas where you can make cutbacks or changes. Speaking openly with other business owners is a good way to determine whether you are paying over the odds for any of your overheads.
You should also consider researching whether it would be cheaper to outsource certain tasks or services to make savings. For example, if you require accountancy services, it could be more cost-effective to use an external company rather than hiring a full-time employee.
Expand customer base
Generally, the more customers you have the higher your profit levels. Therefore, focussing on increasing your client base is a proven way to improve profitability.
There are a number of ways that you can approach this. Encouraging your existing customers to recommend you to others is a well-known method for gaining new clients. It could be worth offering a discount to current clients who achieve successful referrals as a way to further incentivise them to recommend you.
It is also a wise idea to market your business both locally and on social media. Whether you are a marketing novice or an expert, it is important to provide clear messaging that explains the services you offer and a call-to-action, such as your email address or phone number for people to book with you.