Guide to Profit Improvement Techniques

Analyze your current financial position

Keeping a sharp eye on your balance sheet is key to improving profits.

I recommend: For instructions on how to do a break-even analysis, go to Businesstown.com. Microsoft's Small Business Corner will show you how to use Excel to analyze key performance measures such as cash flow and expenses, and analyze your company's current profitability with this virtual workshop at Bank of America. Go to The Profit Planning Group for benchmarking surveys to compare your company's profitability with industry averages. BizStats.com provides free comparative business statistics according to industry and revenue.

Control expenses

It's easy for expenses to get out of hand if you don't have a systematic method for keeping track of what you're spending. You need good small business accounting software and a reliable accountant.

I recommend: Compare small business accounting software at About.com and Top Ten Reviews. Go to Gaebler Ventures for instructions on hiring an accountant. For help finding an accountant, search the online CPA Directory.

Raise prices

Many small business owners are afraid to raise prices for fear of losing customers. But the truth is that most customers barely notice modest price increases, which can have a significant impact on profits.

I recommend: Follow the suggestions in Five Break-through Ideas to Immediately Increase Profits and Improve Cash Flow. Use the tactics in Inc. Magazine's "The Right Price."

Sell more to existing customers

Acquiring new customers is wildly expensive. Focus on increasing revenue from existing customers and you'll cut promotional expenses and increase profits at the same time.

I recommend: Increase Your Profits by Selling More will tell you how to "upsell" and "back-end sell."

Consider outsourcing

Focus on the key elements of your business and reduce personnel costs by outsourcing some of your back-office functions, such as human resources or technology services.

I recommend: Follow these tips for outsourcing at Microsoft Small Business Center. Go to IT Management News for advice on outsourcing IT. Read this HR Outsourcing Buyer's Guide at Yahoo! Small Business.