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June 9, 2023
Today, the average startup takes 18 to 24 months to begin turning a profit. And because the majority of startups fail within their first few years of operation, as few as 40% of the startups that are launched ever recoup their initial investment! With countless obstacles, uncertainties and market dynamics at work, there’s no question — building a small business that’s both growth-focused and profitable is a challenging feat.
While your business doesn’t have to be fully profitable to have true growth potential, startups that do turn a visible profit within their first few months of operation tend to be much more successful in the long run. That’s what makes the five profitability strategies we’re sharing today so powerful.
When you’re growing your business, it’s easy to chase every good idea that comes to mind. Every product prototype can seem like a great idea, every marketing strategy can look brilliant, and every potential acquisition can appear to be valuable.
But the more ideas you chase, the fewer you can executive effectively. Remember, ideas cost both team energy and company resources.
To grow faster and stay profitable along the way, identifying your own niche and clear customer persona can give your small business a unique competitive edge. By focusing on a specific target market, then tailoring your offerings to meet that customer type’s needs, you can stand out from your competitors and build a loyal customer base, without stretching your energy and resources thin.
For businesses with particularly limited resources, digital marketing is one of the easiest (and most affordable!) ways to increase your visibility, reach and customer base. That’s because, in today’s digital-first world, a strategic online footprint is essential to the growth and credibility of your small business.
Customers look for companies that are clear about what they offer, who it’s for, and what benefits they can expect if they make a purchase. And this basic message, delivered across a few relevant online platforms, doesn’t have to cost a lot! A simple website and consistent posting strategy on social media and other industry channels can be enough to solidify your position in your market and build interest in your offerings.
Your finances are the backbone of your small business. That means these essential tasks should get priority (and professional) attention, especially if you’re focused on rapid growth and profitability.
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Outsourcing your most common tasks, like financial planning, bookkeeping, tax management, invoicing, and report creation and analysis can free up your internal team and ensure your business is on firm financial ground throughout your growth process. Your on-demand financial professionals can even help you manage cash flow and supply chain planning, so you can maintain strong profitability even while researching, developing and expanding.
As a young company, you’re in competition with major industry players who can often produce similar products and services faster, cheaper, and with less effort. That means one of the few ways you can stand out, and boost your profits in the process, is to offer unbeatably personalized customer service — and an unforgettable customer experience.
Satisfied customers are more likely to become your most loyal customers, and considering consumers are 90% more likely to buy from a brand their peers recommend, those loyal customers are likely to attract new ones!
To grow your business and profits, put extra effort into your customer outreach, follow-ups and feedback opportunities. Send surveys, ask for suggestions, and act on the ideas and preferences your customers share.
The business landscape across every single industry is continually changing. Only the small businesses that remain agile and forward-thinking can move fast enough to outpace their competition — and thrive over the long run.
To stay ahead of shifts, and stay profitable in the process, your small business must learn to proactively adapt to decreasing demand, supply chain disruptions and seasonal fluctuations. It’s not enough to look backward and make adjustments as you go. To grow and remain profitable, you must look ahead and anticipate what’s next.
By being proactive, watching trends and developing accurate Financial Planning & Analysis (FP&A) processes, you can stay ahead of the changes in every season. And embracing that change might just provide you with new profitable opportunities along the way.
There’s no magic formula for growth or success. But there are a few time-tested strategies that position small businesses for steady expansion — without the need to over-extend your capital or your teams.
By focusing on your niche and customer experience, building out your online presence, outsourcing key financial tasks, and adapting quickly, your small business can be both growth-focused and remarkably profitable. If 40% of startups do turn a profit, there’s no reason yours can’t be one of them!
This material has been prepared for informational purposes only. Escalon and its affiliates are not providing tax, legal or accounting advice in this article. If you would like to engage with Escalon, please contact us here.
As a professional copywriter in the finance and B2B space, Grace Townsley offers small business leaders big insights—one precisely chosen word at a time. Let's connect!
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