The Marketing Message Blog

Are your profit margins rising? If not, try this.

Great article from Doug Hall, in the August/September issue of Business Week Small Biz called Marginal Success  It focuses on a topic that I find small business owners seem to ignore. 

They are very focused on what their prices should be, but not so much on what their real return is.  If you're not increasing profit margins, then you can't really grow. 

Hall gives five solutions of which I picked my top three:

1. Fire your customers-- 20% of customers with the least profitability won't be missed.  Spend that time focusing on marketing and sales and you'll be surprised by the boost you get.

2. Go for 'mailbox money'--He calls it 'mailbox money', you may have heard it called 'passive revenue streams.'  It's money that is generated while you are off doing other things.  No matter what your category is, you should be working on items that are selling when you aren't.

3. Set yourself apart—I'm sure you've heard this ad naseum.  Find your 'unique selling proposition,' etc.  In this case I see it as a call to FOCUS—not selling something for everyone, but something that caters to a specific niche and builds your community.  It's much easier to be an expert if your field is small and well-defined.

If you focus on these first, you should see your profit margins rising and your business in growth mode.

Are you niche enough?

I'm guest blogging at Online Marketing World whose conference is on Oct. 3. Check out "Are you niche enough?" if you're interested.

Think you know who the small business owners are?

An interesting study by Experian defines a segment of small businesses as "microbusinesses: 25 employees or fewer than $10 million or less in annual sales."  They find that 'incorporated business owners have 35% higher incomes; and are 2.62 times more likely to have sales of $5 million or more compared with unincorporateds."  The key here is that since 'incorporateds' tend to grow more quickly, it may be wise to create a niche that targets this audience.  Don't assume that since it has an 'Inc.' after it's name, that it's a large company.

Niche marketing is crucial; getting it right may be the difference between a hit and a miss.  Forget what you think you know about your audience and look with a fresh eye to determine if you are missing a new target segment.