How To Increase Profits In A Company

8 min read

Are you wondering how to increase profits in a company? This article has all that you need to know.

For many businesses, success depends on the ability to earn large profits continually. Profitability keeps businesses afloat and is an essential factor that determines the success of a company. When you start a company, it is necessary to plan out a roadmap for profitability.

Profit margins often impact whether you can secure loans and get investors on board so that you can grow and become a market leader. It is not possible for companies, especially smaller ones with little backing, to remain in business without turning a profit.

As a business owner, it is essential for the company, its employees, and all stakeholders to realize the importance of profitability. You must create and adopt strategies to develop the right environment for maximum profit. The goal of your business is to maximize profits, especially for smaller companies. Profits may be the only capital if they don’t already have investors or financing.

The net profit is the revenue after all expenses, including production, manufacture, and sales, are subtracted. Profit is basically whatever is left over after the essentials are taken care of. This profit goes to the stakeholders. Often it is reinvested back into the business so that it can be reutilized. You need to have money to make money, is what they say.

Business failure is inevitable without sufficient funds. While financing can be one way to stay afloat, it can very soon turn into a liability. With this in mind, let’s delve deeper into how to increase profits in a company.

Reasons Your Business Should Be Profitable

how to increase profits in a company

You want your business to be profitable because:

Profits Allow Growth

Making a profit is imperative for a business that aspires to stretch its arms and legs out. Though it isn’t the only factor for growth, increased profits allow you to explore new business locations, acquire other businesses and experiment with new marketing strategies. Successful growth further leads to an increase in profit, and the cycle continues.

A Profitable Company Can Borrow More

Though financing is not the best long-term plan for a company, it helps in operations for a short duration and brings companies out of slumps. Many small businesses rely on debt financing to take off and generally turn to banks. A bank is more likely to lend money to a profitable company. This way, they are assured that they will get their money back, along with interest, without delays.

Additionally, credit scores and collaterals also play essential roles in a company’s lending decisions. A lender would typically see a company that cannot turn a profit as a risk for default.

Investors Like Profitable Businesses

Smaller companies often need to bring in investors to secure funding for their business. A profitable company is generally considered a good investment opportunity, as the investor too can hope for a considerable return. While bringing an investor onboard, business owners do their best to convince investors that they will turn in handsome profits and make the investment worth their while.

A Good Profit Improves Company Morale

There is no denying that everyone loves a little extra in the piggy bank. A profitable year can indirectly improve morale among employees who reap direct benefits from a company’s profitability. Business owners tend to feel confident and proud of their company, and employees might also take pride in knowing that their effort has contributed to the company’s betterment. An increase in profits also generally means bonuses and gives more room for employers to create more employee-friendly spaces.

You must have heard people often say work smart, not hard. That may be true for a college-goer trying to ace an exam. But for a profitable business, you need to work both smart AND hard. Don’t overload yourself with tedious strategies that come with a lot of risk and cost too much. Simple strategies executed well can go a long way.

How To Increase Profits In A Company

increasing profits in a company

To turn considerable long-term profits, it is essential to set a profit goal. This is the amount of money you need for essential expenditure that drives your business model. Your profit goal should act as a guide that will influence operations and strategies.

While setting a profit goal, consider fixed and variable costs, the owner’s annual income, fixed and variable operating expenses, return on borrowed capital, risk, and future growth. Work with your financial and business advisors to set a goal.

Set realistic goals and focus on incremental growth. Work towards improving and growing small parts of your company at a time.  Profit will follow. Don’t be afraid to put in the hard work, and don’t get distracted by ‘quick fixes.’ Long-term growth is your best bet.

Here are some general tips on how to increase profits in a company.

Price It Right

Don’t undercharge for your product because you’re afraid to drive away customers. Charge what your product/services are worth. Believe in your product and be confident that people will pay what it is worth. Increasing the price creates more profits (per sale). With increased prices, your turnover increases significantly even if you sell the same number of products as before.

Gradual Price Increase

Cautiously increasing the price of your product or service can be an excellent long-term strategy to boost revenue. Keep an eye out for customer resistance. Tell your customers why prices have increased. Don’t execute a random price hike and expect your customers to go along with it. Before using this approach, make sure to analyze the prices of your competitors’ products and process them strategically.

Invest In Marketing

Focussing on your marketing strategy for the most profitable products can significantly improve profit levels. Identify your target audience and create campaigns through your networks. There is no one-size-fits-all or blanket marketing strategy. Discontinue campaigns that aren’t working. Cut out high–risk, low-reward projects and focus on what is working.

With the infusion of marketing in social media, customer engagement has never been this accessible before. Customize ads according to who is expected to interact with them. Your target audience can be engaged digitally through your website or social media.  Consider including demos, webinars, or interactive activities to attract customers. Outside-the-box thinking goes a long way in marketing. This will also help if you want to cross-sell. 

Look At Your Key Cost Areas

Keep an eye on your suppliers, finance facilities, premises, and production. Ensure that you are getting the best deal from your supplies and try to negotiate the best terms. Consider changing suppliers (after extensive research and consultation) if you feel that you could get a better deal elsewhere. A good inspection of your expenditure will show you where you’re sending the most money and see if you can find a supplier that will give you the same quality for less.

See that you’re effectively using your loans and overdrafts and that you’re getting your finance facilities at the most competitive terms available. It is essential to track the physical space your business takes up and check if it is being used effectively. Streamline your processes to reduce the clutter.

Have An Online Presence

This is another trusted technique to how to increase profits in a company. In this day and age, where nearly everything is online, it is almost impossible to do business without a considerable presence on the internet. If your business still isn’t online or you’re in the early stages of starting your new business venture, you miss out on several benefits of being online.

  • Your business should be where the customers are, and this is the ultimate answer to how to increase profits in a company. And everyone is on the internet today. Having an online presence, at least a Facebook page makes your store much more accessible for your customers. It will also be a lot easier for you to reach out to potential customers.
  • Most obviously, customers can shop at your store from the comfort of their own home. They don’t have to make a trip to a physical store. This opens you up to customers from all over the world. Making your products available online significantly reduces the barrier between your product and the customer.
  • A website gives your company more credibility. Customers are more likely to trust and buy from your business if the information is readily available online. An online presence also offers customers the freedom to share reviews about your products.
  • Your store can be open 24/7. This is probably the biggest upside to running an online store. Customers are free to check in to your store and buy what they need any time of the day. 
  • An online presence gives you endless ways to market yourself digitally. Social media, email marketing, and influencer sponsorships are just a few ways you can interact with a whole new world of customers, thereby increasing sales.

Get More Customers

So, how to increase profits in a company? Look at customers not just as individuals but as networks that can get you more customers.  Incentivize your customers to buy more through loyalty schemes or benefits and perks if they return or refer other customers. 

  • Customer Profitability Analysis is a method that determines the profit a customer generates. A customer who generates a revenue stream more than the cost of their acquisition, selling, and serving is what one would call a profitable customer.
  • A diligent business owner not only focuses on products and operations but also on their customers. When you lose focus, you may have to bear the cost of maintaining unprofitable customers.
  • To make your customers profitable, be sure that their experience with your business is a good one. Regardless of what you’re offering, you must prioritize your customer and their experience. Keep in touch with your existing customers. Customers may forget about you and look for other shops if you don’t remind them that you’re still around. Send reminders about restocks, new products, or offers. 

Spend Money And Time Well

Spend money to make money. This is another trusted answer to your query – how to increase profits in a company. This doesn’t mean you have to spend money you don’t have. If you’re in the initial stages of your business, put your profits back into the company to improve quality and customer experiences. Investing in an advertisement on social media could also yield good results.

Your time is money. Don’t spend too much company time on activities that have low value. Know what your time is worth and spend it on activities that drive results in your business. Things like accounting, invoicing, scheduling, etc., are essential, but in isolation, they don’t increase your company’s value. Businesses are often better off outsourcing administrative tasks or hiring for these roles separately. Weed out things that aren’t contributing in any way.

Automate wherever you can. Low-value activities can be replaced with automatic software or online solutions. These technological solutions are often much more streamlined and save a lot more time. Automation frees you to spend more time on innovation or developing strategies.

See that your team is on the same page in terms of efficient time management as you do.

Communicate Effectively With Your Staff

Keep an eye on finances if you want to find answers to how to increase profits in a company. When you have automation in place, keep track of your earnings and set aside time for long-term analysis of the company’s progress.

Buying should be easy. Whether you have an online shop, direct salespeople, or a brick-and-mortar shop, minimize how many hoops your customers have to jump through to get their product. Remember that these are the same hurdles keeping you from profit. If the buying process is too tedious, customers will choose to buy from your competitor.

When experimenting with different types of strategies, you MUST do your research and consult adequately. You don’t want to invest a lot of time and money and end with less than you started with.

Your customers likely need and buy products or services related to what your business offers. Keep an eye on your customers’ habits and spend time market research on how profitable the possible revenue stream could be.

For example, one of the most popular products from Shark Tank’s hit TV show is ScrubDaddy, a smiley-face-shaped cleaning tool that could change texture in hot and cold water. After a highly successful run with ScrubDaddy, Aaron Krause created various related products like the Scrub Mommy, Scrub Caddy, Eraser Daddy, and several other cleaning products. The company is now worth upwards of US$170 million.

Your business most likely has several recurring expenses like rent, electricity, your online space. Avoid late payments to reduce late fees.

Happy Employees = Productive Employees = Profit

This is one of the proven strategies if you are looking for answers on how to increase profits in a company. People, in general, need to feel like valued members of a team to be their best selves and spend time efficiently. Energy is limited, and people spend it best on what they value. If a person’s job is more than just a means of making money, they will work better.

Studies have found that employees who feel heard, valued, respected, and appreciated are more productive and yield a greater profit. An employee’s freedom to discuss opinions and strategies creates an environment that gets the creative juices flowing. These employees are more focused and motivated to complete projects and tasks.

This is especially true for industries in the creative field. Staying in the right mindset is key to exploring ideas. Even in other offices, a happy environment creates strong employee culture. More work gets done when happiness is placed before profit and ultimately results in positive financial performance.

More importantly, a happy workplace gives people a reason to stay. High-stress offices report more burnouts, eventually leading to people quitting more frequently. A positive environment keeps your best talent.

Tips To Make Employees Happy

Show your employees that they have advancement opportunities. Employees are also more likely to work harder if they know their efforts will be appreciated and rewarded.

Create an inclusive workplace.  People come in all shapes and sizes, races, and colors. A hostile and non-inclusive environment could result in you missing out on hard-to-find talent. Try to ensure that each employee feels like they belong in the office and there is no discrimination against on socio-political criteria.

Keep communication lines with both your employees and your customers open. Employees directly interact with customers and have a better understanding of what’s happening on the ground. A good relationship with the staff removes inhibition and allows them to share insights and observations about customer behavior freely. They might have a suggestion for promotions, new products, or ways to make operations more efficient. This information is key to the customer experience that was mentioned earlier.

It is equally important to interact with your customers when you can personally. Your business relies heavily on what the customer wants, and it’s best to hear it from them when you have the time and opportunity. Send out frequent surveys and take feedback on what they would like to see differently. Frequent interaction with customers also keeps you up to date with ever-changing trends

Streamlining Business Operations

Don’t be afraid to take a step back and question whether there are more efficient ways to reach your long and short-term business goals. Ask yourself if production, invoicing, manufacturing, and other essential operation could be more efficient at different times of the year or a different pace.

Seek inspiration from your competition. See how they deal with similar issues. Basic-level issues like comparing raw material costs for low levels can be benchmarked. Benchmarking can also cover issues like stockholding patterns and analyzing production.

Benchmarking gives different takes on a similar issue and can trigger innovative ideas and momentum to streamline your day-to-day operations or even a big bump you’ve been struggling to get over.

Holiday Season Is Game Time

The holiday season is the best time for businesses as consumers are enthusiastic about shopping and is an excellent opportunity to boost sales. With online shopping gaining so much prevalence, your company must have an online presence. Start preparation at least two months in advance.

  • Analyze the year’s trends and figure out how much you’ll need to stock up. Consider different types of products, their popularity, and the space they occupy. This can also be an excellent time to sell off old inventory.
  • Research what might be the best holiday season marketing strategy. Don’t hesitate to shell out a little more on marketing, especially if you are coming up with new deals and promotional offers. Spread the word using the most effective communication methods.
  • Figure out how you’ll spread the word and how much it is expected to cost. Think about what worked last year and if you can replicate it this year as well.
  • You can also use holiday sales tactics like run time-limited sales, gift guides, and “ Buy x, Get y free’ offers. Exclusivity draws customers, and people are more likely to be drawn to a good deal during the holiday season. Perhaps even more as they may have to buy multiple presents.

Track Key Performance Indicators

Key performance indicators (KPIs) are those metrics associated with goals and objectives that express what you want to achieve within a specific time frame. KPIs are quantifiable outcome-based statements. KPIs answer the quantifiable piece of your goals and objectives. To put KPIs together and make sure they work well for you, you need to have four attributes: measure, target, score, and frequency.

The reason KPIs need to work well for you is because KPIs are the heartbeat of your performance management process. They tell you whether you’re making progress, and ultimately, we want to make progress against our strategy, and KPIs do that for us. KPIs help analyze your business’ strengths and weaknesses. For example, rising costs or falling sales.


Outsourcing is a common business practice that companies employ with external parties instead of hiring new employees to take care of certain tasks. Several businesses have successfully lowered operational costs by outsourcing departments while still handling essential aspects of their business.

A company can either outsource for a short period (Eg. Accountant, IT, etc.). They can also be more involved in your day-to-day operations, like customer service or cleaning. Some businesses might employ a company to send their cleaning staff instead of hiring a janitor or a team to maintain the cleanliness of a building.

Outsourcing the mundane and tedious tasks give you and your employees the space to refocus on the company’s main goal. You will now have the time and energy to focus on operations that make you profitable without compromising on service or quality.

Very often, purchasing new equipment for a short-term project or opening a temporary new location can be a big investment. In such cases, it is advised that companies outsource rather than expand business internally.

Even simple operations such as telemarketing or data entry can be outsourced. This can save huge costs that would otherwise go towards relocating and hiring new employees. Outsourcing costs can also be lowered as expenditure on a new employee (such as hiring search, onboarding, healthcare, payroll taxes, and HR).


Remember, your business is unique, and it is essential that you customize your business plan to suit your company’s best interests. There doesn’t exist a one-size-fits-all answer to how to increase profits in a company. This is a strategy that will turn your straw into gold. A well-researched plan will go a long way in making your company profitable in the long run. Remember to work hard and smart. Don’t rush the process.  Mix and match tips that have been suggested, and you’re sure to create something that will work perfectly with your company.

Have we missed anything or have any questions? Get in touch

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You might also enjoy these popular startup growth-related articles What Is Market Penetration Growth Strategy?, Looking For A Business Partner and What Is The Role Of A Mentor? on a similar topic.

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