How to Increase Profitability in 2021

Heading toward the midpoint of Q1 (yes, we’re already almost there), it’s a good time to see what helpful tips are provided by the US Chamber of Commerce (USCC) in general and specifically applicable to 2021. A USCC article called “How Can I Increase My Business’s Profitability?” and others from various U.S. business management authorities agree on the basic and more advanced management advice offered below for small and medium-sized businesses in the first quarter of 2021.
Expert recommendations include everything from surveying your business’s internal profit-building environment to identifying when and where to pivot your business model, as needed, to shift along with changing times in the local, regional, or national economy.

What Kinds of Adjustments are Most Recommended to Boost Profitability?

The USCC article, along with others listed in the Additional Resources list following this article, provide a collective wealth of excellent (including many not often discussed) both highly-relevant classic wisdom as well as COVID-considered current ideas for refreshing components of sales and marketing presentations, policies, and systems, auditing client experience and CRM process, branding, waste cutting practices, and on and on.
Below are the encompassing key ideas offered in the above mentioned USCC article and others (including some listed in the Additional Resources, to help portable restroom rental services businesses refine 2021 strategic plans, as needed, to move forward from the unusual conditions of 2020 toward realizing broader profit margins in 2021.

Best Strategic Adjustments for Small Businesses to Increase Profits

The USCC article is from a panel session that brought together nationally recognized business management thought leaders and asked them to recommend solutions for some of the country’s biggest current challenges for small and medium-sized businesses. Rising to the top of the list of serious difficulties is identifying and successfully implementing the best methods for boosting profitability in small businesses looking to grow this year.
First, congratulations to the many entrepreneurs in the portable restroom rental services industry who are currently working to position your business for growth this year! That means you’re already driving toward greater success.
The USCC’s short answer on the way to long-term stable financial health for your business is to generate top-quality sales. Fortunately, there are a few fundamental approaches you can take to accomplish this caliber of growth in your small business. Based on your particular business model and the point you’ve reached in your organizational maturation, you are likely to do well by employing a combination of these three basic methods recommended by the USCC and others:

1. Give Your Customers More of What They Want.

Growth demonstrates that you are consistently succeeding in connecting with an increasing number of members of your target market and that you are building mutually rewarding business relationships with them. So, by all means, begin by focusing on growing your revenues in the most profitable way — through continued quality sales.
The most efficient approach is to zero in on your sales offerings that are most popular with your prospects and current customers. Then, expand your thinking to consider what kinds of related services you may be able to develop that complement those offerings that your customers like so well. Continuing to identify and implement new ways to help your best customers helps you increase your business’s long-term profitability in several key ways:
• Your current customers are more likely to continue to use your business, which means less pressure on your schedule, your team, and your budget, to attract new customers.
• Your customers are more likely to express their support for your business to their friends and business acquaintances, which draws new customers, builds a more robust network of support across your customer base, and yields higher numbers of repeat sales, referral sales, and sales from word-of-mouth marketing.
• It’s often possible to leverage your own or your relevant vendors’ industry knowledge, or your team’s on-the-job research, and your existing collateral and/or business infrastructure in developing additional revenue channels. That can mean lower product development costs and faster roll-out of a new product or service line.

2. Give Your Customers Less of What They Don’t Want.

The USCC advisory panel emphasizes the importance of understanding your business’s key performance indicators (KPIs) in the areas relevant to sales growth and profitability. The experts recommend routinely reviewing and assessing the financial performance of each of your product and service revenue lines and what those numbers represent, in terms of impact on your organization’s established KPIs.
Continuous reviews of those channel performance metrics make identifying and prioritizing funding the offerings of products and services that are yielding profits easier to do correctly. Such assessments also help open your awareness of alternative revenue channel possibilities. The USCC advisors advise being very strict in your evaluations of underperforming products and services. Ask:
• What would be necessary in terms of money and time investment to bring the asset to a level of profitability that would mean it makes sense to continue offering it?
• Could the funds be better spent on growing other product or service channels?
• How much time does it make sense to give the revenue channel to become profitable before redirecting its funding to grow another product or service line.

3. Make Your Dollars Work as Well as Possible for You — That Means Minimizing Expenses.

While cutting spending is not as exhilarating for most business operators as generating growth, it is critical to financial success to prevent letting profits leak out in various areas of your operations. Monitor expenditures closely, and routinely examine ways that each is impacting your business’s profit margins. Insist on a reasonable ROI from every investment you make in your business. Ask:
• How does your business’s financial performance compare to the industry average?
• What do you think accounts for that contrast, whether bad or good?
• What measurable results are you realizing for the funds you have invested in each product, service line, and other operating system and process?
Focus on reducing waste of all types throughout all operations of your business. Invest in a needs analysis of your operational systems and processes, to gain a deeper understanding of which areas are generating the greatest amounts of value and which are causing the greatest amounts of waste.
Then, follow through with waste cutting measures that will cut the most unnecessary spending of materials, supplies, money, time, or precious energies from each area of your business operations. Find waste in:
• Field services, maintenance, repairs, and cleaning processes.
• Subcontractors’ processes, and vendors’ offerings.
• Marketing and sales operations.
• Management and administrative practices.
Consider ways to replace or eliminate some costly processes in each of the above areas of expense, if they cannot be justified by a sufficient direct or indirect effect on generating a reasonable ROI or by their truly necessary back-end administrative support for the business’s profit-generating activities.
Additionally, as part of your cost management, continuously evaluate prices and value of the goods and services you purchase. Depending on your current service agreements and the degree of financial maturity your business has reached, you may find significantly increased value in changing suppliers and renegotiating current contracts. If you are at a growth stage at which you are now realizing economies of scale, you are likely to qualify for major discounts from new suppliers and significant price reductions from existing vendors.

The Small Business Environment During COVID-19

USCC research findings released December 15, 2020, indicated that, due to the surging number of cases, a majority of small businesses (nearly 62%) are expecting that the worst of the COVID-19 health and economic crisis is yet to happen.
A USCC survey completed November 10, 2020, found that as many as 50% of US small-business owners expect to be able to continue operating for only another year or less and then be forced to close permanently if the current economic conditions for businesses persist.
According to the USCC, a staggering 74% of US small-business owners report that they will need additional government assistance to make it through the pandemic without shutting down permanently. Among the segment of minority-owned businesses, the ratio is 81%.

The Paths to Greater Profitability

Fortunately, many portable restroom rental services throughout the country have been much less negatively impacted by the pandemic. In fact, in 2020, many that have been deemed essential businesses dramatically increased their inventories of handwashing and hand sanitizing stations and portable restroom rentals to industrial facilities and other organizations that they say normally would not have utilized their services.
So, for many entrepreneurs in the portable restroom rental services industry, Q1 2021 is a time for examining approaches to securing short- and long-term profitability, to ensure the financial health and growth of businesses whose rental products and services have become increasingly integral to so many public and private sector organizations.

In summary, the general advice for business leaders in the industry is to prioritize the tasks of identifying and taking timely action to pursue opportunities to increase profitability through 1) helping customers in as many ways as possible, 2) eliminating non-performing revenue channels, and 3) diligently controlling spending. Focusing on your KPIs and taking timely actions to increase the financial performance of products and services and reduce waste is the simple, strong structure within which a business can be expected to grow profitably over many years.

Final Note of Advice From the USCC

The United States Chamber of Commerce reminds business leaders that while the organization strives to inspire decision-makers with wisdom from respected business advisors, you should consult with knowledgeable professionals in your market (such as your local SBA representative, for free guidance) about your specific needs and goals for your business.

Additional Resources
https://www.uschamber.com/co/good-company/ask-the-board/how-to-increase-profitability
https://www.uschamber.com/press-release/small-business-owners-still-feel-pain-of-pandemic-and-fear-more-come-0
https://hbr.org/2020/04/a-way-forward-for-small-businesses
https://www.inc.com/david-finkel/30-simple-ways-to-increase-your-profits.html
https://www.inc.com/david-finkel/15-simple-easy-ways-to-make-your-company-more-profitable-in-2018.html
https://www.entrepreneur.com/article/71318

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