NFIB

Upgrade Your Image and Boost Your Bottom Line
04/ 11/ 2002

When you think about increasing the profitability of your business, you probably imagine hiring new employees, expanding your office or store space, adding new product lines, increasing inventory or pumping up your ad budget. But there are ways to beef up your bottom line without making any fundamental operating changes. In today's Workshop, Jeffrey Moses explains how boosting your revenue can involve simply taking what you already do to a new level.

A beachside restaurant sold homemade pizza, submarine sandwiches, chicken wings, soft drinks and beer. A sign on the door read: "No Shirt? No Shoes? Come right in." The quality of food was superior and the prices were good. But much of the floor space was unused and the restaurant always seemed to be just getting by.

But then it went through a renovation. Not major, but substantial. New paint, new doors made of luxuriously stained wood, a few strategic potted plants and a new sign with a different name.

The restaurant wasn't sold and reopened under new management. Rather, the existing owners had upgraded. The former sub shop was now an Italian bistro, serving gourmet pizza, a variety of spaghetti and pasta dishes, trendy salads, cocktails and wine. Prices were considerably higher than they had been, and gone were the days of no Shirt and no shoes.

In a matter of weeks, the clientele changed. The parking lot was filled with expensive cars, and eventually customers were advised to make reservations.

Clearly, the restaurant had achieved greatly increased profitability without spending much on overhauling its basic operations. The kitchen and large brick ovens were fundamentally the same. Walls hadn't been torn down, and employee hours had not been expanded. But the upscale ambience attracted customers who were willing to pay a lot more for a meal and drinks.

Many types of businesses can upgrade to cater to customers who are willing to pay more for products or service. Most retails shops have the chance to fill at least some floor space with higher-price, designer items. Even stores that normally would not be thought of as "chic" can add upscale items. A hardware store, for instance, could add a section offering high-end plants and gardening products or upscale housewares such as designer drapes, kitchen appliances and bath items. Bookstores could add a section of specialty items based on topics of books.

Another way to increase profitability without changing the fundamentals of your business is to simply change locations when your lease is up. You may be able to transfer all your inventory to a new, more upscale area and continue doing business as you have been, but offer more expensive items to more affluent customers. The lease on your new location will cost more, of course. But without changing fundamental business operations, you will have the chance to secure a greater margin on every item sold.

When upgrading to attract higher-paying customers, it's important that your staff be willing to make the changes required. Waiters can no longer come to work in cut-off jeans. Salespeople need to appreciate and be able to explain to customers the benefits of high-price items. Management needs to be able to monitor the store's overall appearance, and marketing must also change. But these are small changes to make. Word-of-mouth can take over from there, and youÆll find your store is attracting the type of customers you desire.

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