Want to improve your bottom line in 2020? Start with these 3 goals
The new year presents new opportunities and new challenges for your business. These include how to improve your bottom line. To succeed, you should be clear about what you want to achieve by 2021. Your New Year’s resolution for your business likely includes improving your bottom line.
As any investor or businessperson knows, a company’s bottom line refers to the sum of all revenues less the cost of total expenses. Most businesses measure their bottom line in terms of profits generated during a given time period. Some actions may improve your bottom line in the long run without resulting in immediate hikes in profitability.
For example, recruiters might focus on the productivity or longevity of new hires as a key business objective. Quality assurance officers might fixate on the reduction of waste during product development. Either of these initiatives would likely contribute to a company’s bottom line in the long term. They might even be more important than short-term profitability.
If you’re not sure where to focus your bottom line-boosting efforts in 2020, consider the following objectives to improve your bottom line:
1. Reduce cyber vulnerabilities.
Data breaches are extremely costly. This means cybersecurity should be a core objective of every company seeking to protect its bottom line in the digital age. Keeping corporate and customer data safe is becoming harder. This is because the frequency of cyberattacks continues to increase.
Constantly evolving regulations governing the collection and management of data may present even more challenges for your business. Noncompliance can lead to fines, bad public relations, legal challenges, and a host of other potentially expensive setbacks.
Ensuring compliance is one path to reducing security vulnerabilities. In addition to following regulations, you’ll also want to make sure you’re implementing basic cybersecurity best practices. Failing to do so will invite costly breaches and inevitably inhibit growth.
To help with this, the National Institute of Standards and Technology created a cybersecurity framework comprised of five components. The components include identify, detect, protect, respond, and recover. As David Wagner, CEO of Zix, a leader in email security technology, notes, “Working out of the cloud can satisfy most of those requirements, but not the first (identify). Many SMBs simply are not aware of their true liabilities and, as a result, can’t fix them.” Working with an outside cybersecurity expert can help your team better identify vulnerabilities.
2. Increase customer spend.
Finding new customers is usually a business imperative. Depending on the market you’re operating in, generating additional spend among your existing customers may be a more economical path to revenue increases. A growth strategy based on upselling and cross-selling is often more viable than one built upon converting new leads. This is because your existing customers have already demonstrated a willingness to engage with your brand.
Will Chen, the founder of P.L.A.Y (Pet Lifestyle And You), points out several tactics that can increase revenues for businesses of any size. “A rewards program, targeted promotional campaign, and email marketing can all be effective,” he says. “The main idea is to give a reason for current customers to make revisits and hopefully spend more.” If you’re maximizing revenue from existing customers, you’ll face less pressure to capture an ever-growing share of the market.
This is not to suggest that you shouldn’t also recruit new customers. In fact, you can leverage your current customers to reach new ones. Use incentives to encourage your existing fans to share your product or service with others. You’d be in good company with this approach. Uber, Dropbox, and Eat Purely have all used referral incentives to build their businesses.
3. Decrease overhead costs through automation.
Most major corporations are looking for ways to cut costs and boost efficiencies through automated technologies, and you can do the same. The old adage “Time is money” rings true. Every task your employees perform in a day is costing your company salary and benefits expenses. If a typical workday includes employees completing tasks that could be automated, then you’re missing opportunities for those individuals to accomplish higher-impact work that could bring in more revenue and improve your bottom line.
Initially, an investment in the technologies that enable automation will look like another expense, but the benefits are cumulative. Whether you’re automating accounts payable procedures — leading to faster invoice approvals and reductions in procure-to-pay cycle time — or making customer service more efficient with AI-powered chatbots and ticket handling, you’ll grow your bottom line over the long term.
Crane Brothers, a menswear retailer, saw the payoff when it automated the transfer of its sales data. Once the company got its point-of-sale system talking to its accounting software, data could be automatically shared between the programs, resulting in more time for the retailer’s staff to assist customers. Company founder and managing director Murray Crane estimates that this use of automation saves his team 40-80 hours each week.
Improve Your Bottom Line
Your bottom line should be the compass that guides your biggest business decisions in the year ahead. Ultimately, your goal is profitable growth, but just remember that there are many ways to get there. Set clear and achievable short-term objectives in service of that long-term goal, then be patient and let the profits come to you.