The primary objective of establishing your business is to make profits; not even to make profits but to maximize profits. Except you are running a non-profit organization, this should be your motive as a business man or woman. Unfortunately, not all businesses are able to achieve this primary objective. The truth is that, if any business fails in this area, then there is no reason to remain or continue in such business. Whether you are struggling to make profits or you want to increase your profits, these can be achieved in these four ways. But in all, the third point as enumerated below is the simplest and more practicable.

1. Increase Your Sales Volume
Before you can breakeven in any business, not to even talk of making profits, you should be able to sell at least a certain minimum number of your products. This level is called Breakeven Point. Any sales above that level if you maintain your margin will cause you to record gains. So, if you want to increase your profits, you need to increase your sales volume without necessarily cutting down your margin. In an attempt to increase sales, some people adopt various methods which include, selling on credits, reducing price or giving discounts. Of course, all these can boost your sales but they all have their limitations.

For example, if you sell on credits, there is no guaranty that the customers will pay back. This will lead to bad debts which will ultimately erode your profits. If you know that you want to sell on credits, it is advisable that you only sell to customers you can vouch their credit worthiness. Also, you can establish a credit limits for each customers so that they are not allowed to buy beyond their credit capacity. Credit term should be clearly established and agreed upon so that both of you know the payment period.

If you reduce your price, this may bring more revenue but it will lead to lower margin on sales. If this happens, you may be surprised to discover that there is no corresponding increase in your profits. Your profits can even be lower.

Giving of discount seems good but this must be done with caution. Otherwise, it will soon become a standard that you must give discount every time a customer buys. You should be able to justify the reason for the discount. For example, it can be a quantity discount. This means that any customer that buys up to certain quantity of your product(s) will benefit from such discount. It should not be for every Dick and Harry



2. Increase Price
If you operate in a market where you can easily increase your price without losing customers, you can take advantage of this. But if you sell commodity in a very competitive market, you may not be able to do this. If there is any way you can add value to what you sell which can justify the increase in price, customers may be ready to pay. But this must be very convincing and the customers have the ability and are ready to pay for the extra. Read the full article here: http://www.businessinfohub.com/2015/05/23/how-to-increase-your-profits/

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