How the right tech can help your business’ profitability
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The common myth is that new businesses may not see a profit until the third year of operations. It is estimated that 70 businesses are launched per hour in the UK. However, only 57 percent of these survive beyond 5 years. Further research indicates that only 40 percent of new businesses are profitable while 30 percent are breaking even. As more businesses seek ways to see favourable returns sooner, many are seeing positive results by turning to technology as one of their modern essentials in business expansions. While some of them require an initial financial investment, the benefits can be far-reaching for new businesses and their financial wellbeing.
Customer relationship management and sales reporting tools
Customer acquisition and retention rates are a fundamental pillar in a business’s profitability. However, it can also be a costly one. Acquiring a new customer costs around 5 times more than retaining one, according to past research. Increasing your customer retention rate can also result in a 25-95 percent improvement in profitability. However, to improve your odds of customer retention and your acquisition rates, businesses need access to customer data to maximise their sales funnel.
Customer relationship management systems help you build a strong relationship with your customers, old and new. However, the way you do that can be unique to you and your brand. For instance, you may choose to use a daily planner software to plan sales follow up activities. Alternatively, customer relationship management software like Freshsales and Salesforce can help your business with lead generation and cost management per lead. For 61 percent of marketers, lead generation and traffic is their top challenge and only 4 percent of website visitors are purchase ready, says estimates from Marketo. These tools can simplify the process for businesses by helping you weed out non paying leads and increase your lead conversion rate.
Operational and resource maximisation: project management and collaboration software
Another pillar of profitability in business is improving your internal efficiency. This includes cost and resource optimisation. Inefficiencies can cost businesses 20-30 percent of their revenue annually, according to statistics released by research firm IDC. The use of project or resource management software can help businesses identify bottlenecks in their business process, which is costing the business time and money. Also, the use of the right project management and collaboration software aids in optimal staffing levels- a major cost for businesses.
By identifying opportunities for redundancies and reducing process duplication (or even outsourcing), you can save your business money and hence, increase your bottom line at the end of the financial year. Collaboration software like Asana, Float, and Tempus Resource can also provide valuable insights into resource allocation such as potential investment projects.
Competitive strategy and predictive analysis
The benefits of big data in business have been in the headlines for the last few years. In a Bain & Compa study, businesses with the most developed analytics capabilities not only commanded a larger market share but they also were 2 times more likely to be in the top 25 percent for profitability in their relevant sectors. For small businesses, the use of big data can cut your operating costs, improve your efficiency, and help you compete with larger counterparts- all key when trying to boost your profitability.
While the use of big data was seen as a tool for larger and capital-rich businesses, there are now many cost-effective big data solutions suited to small businesses. Some of the options available to small businesses include ClearStory Data, which uses internal and market-driven data to provide customer analytics. Another big data solution is Kissmetrics, which helps you segment your market and gives your business the chance to focus on their individualised needs and characteristics. Gaining insight into your customer behaviors and market patterns put your business in a unique position to capitalise on predicted trends. It also helps your business address any gaps in your business operations based on customer feedback, such as lack of round the clock customer service or product varieties.
The right tools can make all the difference in your success as a small business owner. Choosing business tech and tools that improve key business processes means your business can access more opportunities to make a sale, manage your costs, and achieve optimal efficiency- vital principles of profitability in business.
