As the CEO of one of Australia’s largest financial solutions companies, I’m often talking to small business owners about growth, and whilst taking on larger contracts is exciting, if it doesn’t result in increased bottom-line profit, it can result in business failure, shares Angus Sedgwick, CEO of OptiPay

A profitable business is the ultimate measure of success that dictates longevity and allows for expansion. However with the cash flow challenges being faced by Australian SMEs it’s a difficult and delicate balance at the moment between increasing revenue and controlling expenses.

Six tips for optimising revenue and cutting costs to help your business’ profitability.

1. Identify new revenue streams

Being dependent on a single source of income makes your business more vulnerable. Consider diversifying your offerings which could involve developing new products or services that complement existing ones. Think outside the box with this. Could you introduce a training and consultancy offering on a fee for service model to support the implementation of your products?

2. Enter new markets

Entering new markets is another way to diversify revenue streams and increase sales. This could mean you expand geographically to reach a wider audience, or create new products specifically for a different audience to widen your customer base. If you’re a B2B supplier and you’ve always targeted small business could you develop a solution for larger companies or niche markets?

3. Enhance existing revenue streams

One of the most cost-effective ways to increase revenue is leveraging your current customer base. Look at strategies such as up-selling and cross-selling to optimise existing databases. Retaining existing customers is generally more profitable than acquiring new ones so consider implementing loyalty programs that reward repeat business.

4. Review your pricing strategy

Another way to maximise profits is to review your pricing strategy and consider the value of what you’re offering. Rather than basing your product or service prices solely on costs – consider value-based pricing where you set prices according to the perceived value to the customer. This approach requires a deep understanding of your customers’ needs and how your product or service meets them.

Dynamic pricing is another strategy you could adopt which involves adjusting prices in real-time based on market demand, competition and other influences. Businesses may find using data analytics helpful if using dynamic pricing.

5. Unlock sales revenue

Consider what options you have to help unlock your sales revenue. Invoice financing is worth considering for B2B businesses as it allows owners to receive an advance on the money owed from their outstanding invoices. We often see a snowball effect from this where unlocking that cash flow then allows businesses to grow at a faster rate because they’re no longer having to wait 30 days or more to be paid for their invoices. They can utilise their sales revenue immediately to drive growth.

6. Cut costs

Controlling expenses is just as important as increasing revenue when it comes to maximising profitability. Start by conducting a financial audit and identifying areas where your business may be overspending.

Other strategies for cutting costs

• Look at negotiating better supplier contracts with more favourable terms.
• Consider bulk purchasing to secure discounts and lower unit costs
• Identify inefficiencies in workflows to streamline operations
• Reduce waste
• Invest in technology that could yield long-term savings such as automation tools for invoicing and payroll

Keep in mind, top line revenue growth does not always lead to bottom line profitability, in fact, it can lead to making losses when the business was previously profitable. Controlled growth is crucial

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