Effective Strategies to Increase Business Value and Profitability

Business owners always want their companies to make more money, as it’s a big sign of success and helps the business grow.

Every business can improve how much money it makes! That’s why it’s important to understand what really adds value when you're getting your business ready for sale or planning on selling a business in the near future.

In this article, we’ll share simple strategies to help your business succeed, like planning for growth, getting everyone in your company on the same page, and making work processes smoother.

Top Strategies to Increase Business Value

1. Conduct Market Research

Understanding what your customers want and how they think is key to growing your business. Market research helps you learn about your current customers and find new ones by discovering what motivates them to buy your products or services. This information can help you set better prices, improve your offerings, and market more effectively.

• Use Simple Tools: You can start with free or low-cost options like online surveys through tools like Google Forms or SurveyMonkey. These let you ask customers what they like or want.

• Try In-Depth Research: If you have more money to spend, hire experts to do focus groups where people talk about your products in person. This gives you deeper insights.

• Find Out Willingness to Pay: Ask customers if they’d pay more for a new feature, like an extra $10 for a better version of your product. For example, a clothing store might learn customers would pay $15 more for eco-friendly materials.

• Learn What Keeps Customers Coming Back: Find out if discounts or special offers would make customers buy from you again. For instance, a coffee shop might discover that a 10% discount on a second purchase brings customers back.

• Check Out Competitors: Look at what other businesses are doing to see how you can stand out. Platforms like X can show you what customers are saying about similar businesses.

Example: A small bakery used a free online survey to ask customers what new desserts they wanted. They learned people would pay AED 5 more for gluten-free options, so they added those and increased sales by 20%.

2. Examine Financial Statements

Looking at your business’s financial statements helps you understand how much money you’re making and spending. By studying these reports, you can find ways to save money and increase profits. Whether you're running your current company or considering buying a business and want to make an informed financial decision, reviewing financial statements like the balance sheet, income statement, and cash flow statement is essential.

• Learn the Basics: Get to know the balance sheet (shows what your business owns and owes), the income statement (shows money earned and spent), and the cash flow statement (shows how cash moves in and out). This helps you see where your money is going.

• Focus on What You Can Control: As a manager, you can influence things like cutting unnecessary expenses or increasing sales. For example, if the income statement shows high supply costs, you might negotiate better deals with suppliers.

• Spot Problem Areas: Look for places where spending is growing too fast. For instance, if your balance sheet shows rising costs for materials, you can focus on finding cheaper options or reducing waste.

• Talk to Your Team: Use these statements to have discussions with other leaders about budgeting or making work more efficient. This can lead to smart decisions that save money.

Example: A small store found on its income statement that shipping costs were rising fast. By switching to a cheaper delivery service, they saved 10% on expenses, boosting profits

3. Plan Your Finances and Stick to the Limits

Creating a budget helps your business spend less by setting clear limits on what you can spend in different areas. Sticking to these limits keeps your expenses under control and boosts profits. As a manager, learning to make and follow a budget is a key skill to help your business grow.

• Set Spending Limits: Make a budget that sets caps on things like employee salaries, one-time purchases, or office costs. For example, you might set a 734,000 AED limit on executive salaries to save money on wages.

• Learn Your Company’s Process: Understand your business’s budgeting timeline and rules. Look at financial statements to plan a budget that helps your team work on projects that make more money.

• Track Spending: Keep a record of everything your team spends money on and compare it to your budget. This helps you see if you’re overspending and learn how to make better choices next time.

• Cut Unnecessary Costs: Look for ways to reduce costs, like lowering administrative expenses or avoiding big one-time purchases that aren’t needed.

Example: A tech company saved 12% on costs by setting a budget that limited office supply spending to 18,350 AED per month and tracked every purchase to stay within the limit.

4. Eliminate Nonessential Processes

Finding and removing unnecessary steps in your business can save time and money, making your work more efficient. This means looking at how things are done and cutting out tasks that don’t help you deliver great products or services to customers.

• Review Your Workflows: Step back and check if every task is needed. For example, if your products are checked for quality before shipping and arrive safely at stores, you might not need a second quality check at the store.

• Look at Expenses: Check your income statement to see where you’re spending money. Are there costs you can cut by simplifying how things are done? For instance, you might find you’re paying for extra packaging that isn’t necessary.

• Compare with Other Businesses: Look at how similar businesses do things (this is called benchmarking). For example, compare your energy costs with other companies or share ideas with trusted businesses about how they manage their stock. This can give you new ideas to save money.

• Adjust Timing for Better Cash Flow: Think about when you make or ship products. For example, producing and sending out products earlier in the month might help you get paid faster, improving your cash flow.

Example: A clothing company saved 15,000 AED a month by skipping a second quality check at stores after finding their first check was enough, speeding up their process and cutting costs.

5. Optimize Cost Structure to Maximize Gains

Keeping a close eye on what your business spends can help you make more money. Most businesses have some waste that can be cut, but you need to be careful not to lower the quality of your products or services.

• Check Supplier Deals: Look at what you’re paying suppliers. Can you get a better price? For example, negotiate lower costs or switch to a supplier with better terms. You could also work with fewer suppliers to get bigger discounts or buy materials only when needed to save money.

• Review Financing: Check if your loans or bank accounts have the best terms. Are you paying too much interest? Talk to your bank to see if you can get better rates to save money.

• Use Space Wisely: Look at your office or store space. Are you using it all? Could you rent out extra space to make money or rearrange it to work more efficiently?

• Improve Production: Find ways to use fewer materials or less time when making products. For example, change how you produce items to use fewer resources or cut down on work hours without hurting quality.

• Understand True Costs: Use a method called activity-based costing to see exactly how much each part of your business costs. This means looking at things like salaries, rent, or materials and figuring out what each task costs. This can show you where to save money.

• Ask Employees for Ideas: Your workers often know the best ways to make things faster or cheaper. Ask them for suggestions on how to improve processes.

• Review Pricing: Even a small price increase can add up. For example, raising prices by 3.67 AED per item could bring in thousands of AED more over a year.

Example: A café saved 22,020 AED a year by negotiating better prices with its coffee bean supplier and renting out unused storage space to another business

6. Review Your Offer

Wondering how to make more money from what you sell? Let’s answer some common questions about reviewing your products or services to boost profits.

Q: Can I charge more for my products or services?
A: Yes, you might be able to raise prices, especially if you offer something special, like great customer service or a unique product. Try increasing prices a little, like by 3.67 AED per item, and see if customers still buy. Even a small increase can add thousands of AED to your profits over a year without losing sales.

Q: Who are my best customers?
A: Your best customers are the ones who spend the most or buy from you often. Check your sales records to find them. 

Q: How can I sell more to my best customers?
A: Offer special deals, like a loyalty discount or a subscription plan, to keep them coming back. You could also bundle products together, like selling a phone case and screen protector as a package for 110 AED instead of selling them separately. This encourages customers to spend more.

Q: What if I’m not sure what my customers want?
A: Talk to your customers! Use surveys or check their feedback on platforms like X to learn what they love about your products.

7. Train and Keep Your Best Workers

Having a great team makes your business stronger and more profitable. Training new workers well and keeping your best employees happy helps your business grow. Here’s how to do it:

Step 1: Set Up a Training Program
Create a plan to teach new workers the skills they need to do their jobs well. For example, a restaurant might train new staff on how to use the ordering system and talk to customers. Spend time teaching them so they feel confident.

Step 2: Keep Training Ongoing
Don’t stop training after the first week. Offer regular classes or workshops to help all workers learn new things, like better ways to sell or use new tools. This keeps everyone up to date and ready to help the business.

Step 3: Make Work a Great Place
Create a workplace where people enjoy coming to work. Listen to your team’s ideas, give them clear goals, and thank them for good work.

Step 4: Reward Your Best Workers
Find your top performers,those who sell the most or get great customer feedback, and keep them happy with raises, bonuses, or extra time off. 

Step 5: Check In Regularly
Talk to your team often to see how they’re doing. Ask if they need more training or support. This helps you keep your best workers and makes them feel valued.

Example: A small gym trained new staff to teach fitness classes and offered monthly workshops on customer service. They also gave a 734 AED bonus to top trainers, which helped them keep their best workers and boosted class sign-ups by 25%.

8. Reach More Customers

Selling to more people or growing in your current market can bring in more money and make your business more valuable. Use this checklist to reach new customers without taking big risks:

• Learn About New Markets: Research new places or groups of people who might buy your products. For example, a bakery might sell to nearby offices if it finds they want snacks for meetings.

• Test Small First: Try selling in a new area with a small batch of products. For instance, a clothing store might sell online in a new city for 3,670 AED to see if it works before spending more.

• Improve Your Current Market: Find ways to sell more to the customers you already have. For example, a café could offer a new coffee flavor for 14.68 AED to attract regular customers.

• Partner with Others: Team up with other businesses to reach more people. For example, a gym might work with a health food store to offer discounts, bringing in new customers.

• Use Online Tools: Sell on websites or social media like X to reach more people without spending a lot. A small shop might spend 1,835 AED on online ads to reach new customers.

9. Make Customers Love Your Business

Making your customers happy is a great way to keep them coming back and make your business more valuable to potential buyers. Start by creating a welcoming place where people feel good, like a cozy bookstore in Dubai that added comfy chairs and friendly staff who smile and help quickly. Train your team to give amazing service, like helping customers find what they need right away.

Ask customers to share their thoughts online, such as leaving reviews on platforms like X, to show others why your business is special. You can also start a loyalty program to reward customers who keep buying, like giving them a free item after several purchases. 

10. Build a Strong Brand and Keep Marketing

A strong brand and good marketing make people trust your business and want to buy from you. Follow this action plan to keep your marketing strong and grow your business:

1. Create a Clear Brand: Make sure your logo, colors, and message are the same everywhere on your website, social media, and store. For example, a bakery might use a sunny yellow logo everywhere to be memorable.

2. Keep Advertising: Don’t stop marketing, even if you’re busy. Spend a small budget on social media ads on platforms like X to reach new customers.

3. Share Customer Stories: Post customer reviews or photos on your website or X to show why people love your business.

4. Try New Ideas: Test fun marketing ideas, like a contest where customers win a 183.50 AED gift card for sharing your posts. This can bring in new customers.

5. Track Results: Check which ads work best. If a 1,835 AED ad on X brings in 7,340 AED in sales, keep doing it!