How to Make More Money
by Rob Stam | April 24, 2018
I’ve never met a business owner who doesn’t want to make more money. If you don’t, then you’re not a business owner, because profit is the only reason a business should exist. You don’t start a business because you love it (that’s called a hobby). And you don’t start a business because you want to save the world (that’s called a charity). The only reason you ever structure any idea or organization as a business is for the purpose of yielding a profit. You’re in it for the money, period. What you do with the money—whether it be to fund your hobby or save the world—is up to you.
So, how do you make more money? Well, you sell more stuff, right? Whether it’s widgets or services, you have to sell. But that doesn’t really make you more money, that just creates more revenue. You’re after profit, and there are really only two ways to increase profit: better efficiency and better branding.
The first way is obvious to any business owner. Implementing better process with improved measures of efficiency yields higher profitability. Since the introduction of the assembly line (and even long before that) we have been constantly looking to improve efficiency. However, the second way, branding, is not so obvious.
Branding is a very misunderstood and undervalued concept in most small businesses. When you hear the word brand your mind probably jumps to logos and tag lines. But that’s not what branding is, those are just branding tools. What branding is, is a relationship. Good branding tries to build long-lasting, trustworthy relationships between a company or product and its consumer.
Your brand is really all about perceptions. Just like in your social circles, your perception of another person determines how much you’ll invest in that relationship. So the goal of branding is to create the perception that you want your intended audience to have. If you do this successfully you will have customers who will be loyal to you and your product, which means you spend fewer advertising dollars to get them and you can raise prices to increase your profitably without losing them.
The most overused example in all of branding has to be Apple computers. Apple is the most profitable company in the history of the world. Now certainly some of that is due to innovative technology and great efficiency, but I would argue that the number one reason they are so profitable is because of branding. Their customer base is so loyal, so in love with them, that they can throw anything in a white box with the Apple logo on it and they’ll sell millions of them. Even if they stumble and release a bad product, their customers will come back.
Few Apple fans can tell you why their computer or phone is better than another. On the contrary, every PC geek (and I use that term as a compliment) out there can list a thousand reasons why Apple is not the superior product. But the reality is, most people just don’t care. Apple customers don’t compare their product with a PC, they just pick which Apple product they want. Apple customers know they will pay more for an Apple computer than a comparable PC, but that fact has no relevance. They are in a relationship with Apple that is stronger than any feature spec or advertisement.
How to build a great brand is another topic. But step one is to realize that if you’re not happy with your margins, the answer may lie somewhere you didn’t expect.