For the best chance at success in a competitive market, business owners must develop good habits when it comes to customer retention, marketing, tax management, accounting, and process evaluations. Are you tracking these vital areas to keep your company on track? Failure to keep an eye on their associated costs could cost you your business, but knowing what to keep your eye on is half the battle.
1. Customer Retention
Successfully running a larger entity like a wholesale business requires a huge sales turnover. Business owners should therefore endeavor to sell more products to their existing customers, as retaining your customer base will also grow your business. Rewarding loyal customers is an effective retention strategy, as few but loyal customers bring in more sales than many customers with no particular allegiance. Loyal customers also act as brand advocates, even without your asking them to.
“Repeat customers maintain the sustainability of most businesses, but loyalty is minimal in modern markets,” explains ConfidentWriters accounting advisor Jessica Mills. Practice novelty and creativity to keep your existing customer base sticky, whether that’s supporting a cause that speaks to your customers or throwing in a bonus item or service.
2. Marketing Strategy
Strong sales also rely on effective marketing. Business owners should adopt digital marketing and direct marketing strategies and build networks by attending trade shows and meetups. Referral marketing and cold calling also create relationships that can beef up your brand awareness. You should also embrace competition on customer service rather than on price, as customers tend to develop a strong attachment to businesses who treat them well. Good service needn’t cost much—or even anything at all. To minimize costs, work with local marketing agencies who understand your business, and provide clear guidelines and budgetary constraints for any brand-tailored marketing services you contract.
3. Tax Management
Consumers who physically buy goods from companies pay tax while online sales are tax-free, irrespective of the location of the customer. Keeping your business on track usually requires accounting consultations to learn state laws regarding international sales.
“Finding the best tax procedures allows business owners to minimize expenses and compete effectively in the market,” says Jason Payton, payroll and accounting administrator at Paper-Research. Self-employed business owners claim business incomes on personal tax returns while corporations undergo taxation independently of their owners. Sole proprietors are free to withhold taxes from their income and remit to the government later. Partners in a corporation, however, incur taxes as employees of the company. Companies must understand their terms of operation and ownership to simplify tax remittance.
If your business depends on import goods, you should be conversant with import duties and other tax regulations in order to make less costly choices. Using a duty calculator or similar online tool, you can estimate your taxes and plan for future obligations.
4. Bookkeeping and Expenditure Tracking
Bookkeeping entails categorizing and recording daily business transactions as well as the reconciliation of bank statements. Whether you use outsourced or in-house bookkeepers, cash or accrual accounting methods allow you to follow up and resolve any discrepancies that may arise. Expense tracking simplifies monitoring and evaluation processes, helping develop financial records and conduct effective tax evaluations. Some expenses cover both business and personal activities, so documents must reflect shared use. All of these functions are much more easily performed when your accounting software is integrated with your inventory management system.
5. Gross Margins
To improve their overall income, companies should know their margins, as calculating them provides valuable information about production costs, allowing you to make any necessary adjustments to ensure future viability.
Margin shows the revenue made after deducting the cost of goods sold (COGS). To calculate gross margin, first find your gross profit (revenue – COGS). Then, divide your gross profit by your revenue, which will yield a decimal that you can then turn into a percentage by multiplying by 100.
- $200 revenue - $150 COGS = $50 gross profit
- $50 gross profit ÷ $200 revenue = 0.25 gross margin
A margin of 0.25 means you keep 25% of your total revenue. The other 75% was spent buying and/or making the product, which here cost $150 and was sold for $200.
Periodically Reevaluate Your Methods
No solution should ever be considered final, particularly with the rapid rate at which technology is evolving. Many new ventures start out using spreadsheets to manage their accounting but later switch to more sophisticated methods like QuickBooks Online to improve operational efficiency as the business grows. Evaluate the amount of time that you or your staff is spending on bookkeeping and the impact on the business. The cumulative time savings gained by implementing more efficient, more high-tech methods can instead be spent actively growing your business and your bottom line.