Anyone who founds a company has many goals, but there is one that is (almost) sure to be on every entrepreneur's list: to be profitable. It seems simple, but achieving profitability, especially in the long term, is something that costs (and a lot). In this article, I want to give you some tips to increase the profitability of your business.

How to make an SME profitable

To begin with, it's important to talk about what profitability is. Profitability is the difference between the benefits obtained, compared to the resources used.

For an SME to be profitable, it is important to apply the following tips:

Keep adequate control of your expenses

If there is no expense control, it is very difficult to measure a company's profitability, since it is not possible to assess exactly the resources we have used.

This control also allows you to know what expenses of your company you invest the most money in, in order to reduce them and become more efficient.

Although the administrative tasks  related to expenses are not the focus of your business, but it is very important to carry them out, so I recommend that you do them well but invest in them as little time as possible.

How can you do it? Using a software to do for you the steps related to the collection of invoices, control and analysis of expenses and their reduction.

Analyse the profitability of your client portfolio

Normally, companies have a lot of customers, but not all of them are equally profitable. For this reason, it is important to identify those that are to invest more effort in attracting and retaining them, since they are the ones that will have the greatest impact on the profitability of your business.

A recommendation is having as much information as possible about your customers, because thanks to this information you can create greater value for them.

Revise your business plan

The needs of the company change and, with them, the objectives and goals. It's a mistake to design a business plan that can't be iterated, modified and improved. If there's one thing your business needs, and especially your business objectives, it's to be realistic.

To give you an example: I'm sure you currently have products that generate large revenues, that don't match the products that generated income in the beginning. Everything is changing and evolving, and that's not a bad thing.

Reviewing and iterating the business plan will allow you to focus your effort, time and money on those products that generate the most revenue and expand the variety of services offered based on them. And, consequently, be more profitable.

How to set up a profitable business

There are many formulas to increase a company's profitability, which vary depending on each type of business.

The truth is that Some are common to all, like the three I have told you about in this article:

• Keep adequate control of your expenses
• Analyse the profitability of your client portfolio
• Revise your business plan