Too often in business we get trapped into reviewing our sales numbers without analyzing the all important profit number. This is commonly referred to as the bottom-line of a business. There are various ways you can dramatically impact your profitability.

1) Under Pricing Kills Profits!

Many small businesses have thinner profit margins than larger firms do because they tend to under price their products or services. So why not just raise prices? I know the feeling--you're scared that your competition might swoop in like a bird of prey and your customer base might shrivel overnight!

If you have thought about raising prices but havent done so, let me give you an example that may give you the confidence to do so. My client, Steve Lopes of Stanley Steemer based out of Edison, NJ had a positive experience from raising prices about a year back. After giving me much resistance to my advice to raise prices, Steve agreed it would be prudent to test it. The result? Sales and profit went up for the month in which he raised prices and Steve was pleasantly surprised at the little, if any resistance he got from his customers.

Since then, Steve has increased prices 2 more times. What happened to sales and net profits? Sales surged by 25% for that 12-month period and net profits for that same period skyrocketed by 84%. Since Steves sales are in the 7 digits, these sales and net profit increases equate to very significant numbers. Best of all, it allows Steve with a lot of extra cash to do things he wanted to do in his business and personally.

Still unsure about raising prices? Remember, you can always cut them back. More likely then not, youll be surprised at the positive impact itll have on your business, assuming of course you continue to provide the same or better level of service to your customers.

2) Is The Marketing Working?

Make your advertising accountable.

You've probably heard the familiar maxim: "Twenty percent of my advertising brings in 80 percent of my business, but I don't know which 20 percent!" I see that as a common problem with many small-businesses. They dont track their marketing to know whats working, whats not. This problem stems from a bigger problem and that is not being aware of the difference between institutional and direct-response advertising.

Institutional advertising, also known as image advertising, is all about you, the business owner. How great you are, your qualifications, years in business, full-service product line, etc. Its the most common form of advertising. You see institutional ads every day in print or in TV. Theyre often cute, creative, funny, utterly ineffective and not trackable. Simply put, an institutional ad has no way to track results and is there to keep the company name in front of the public.

By contrast, direct response advertising is all about your customer and his or her needs. Its purpose is to stimulate a phone call, letter or a visit. Best of all, unlike an institutional ad, it is trackable so you can make every dollar you spend on it accountable. This then helps to measure the effectiveness of each ad.

3) The Easiest Way To Profits

Keep a lid on spending! Resist the urge to spend freely. You may like the way a lavish office and expensive furniture looks, but does it really contribute to your business? In some businesses, a fancy office is critical; in most it is not. I once had a small business owner who spent $5,000 on his front office desk in a business operation that had no office visits. Needless, to say, this business owner did not survive too long in business due to this and other extravagances. Get as much value out of every transaction, whether youre leasing office space or stocking the kitchen.

Important caveat: Dont compromise when it comes to spending money on your own self-development. Small business owners dont give this enough importance and thus spend far too little money in this area. This is a big mistake. As an example, in the next 5 weeks, Ill be attending three conferences across the country and investing about $4,300 in seminar tuition fees, travel and boarding. Not a small chunk of change you would agree, but in my opinion, well worth the investment. You are the most important asset in your business. Take good care of you.

4) Have You Got A Back End For Every Sale?

Most small-businesses ignore the easy money to be made with a back-end sale. Yet, the really smart business owner never forgets that the most profitable words in the history of business were: Would you like fries with that? I have read that these words instantly doubled the total sale.

Your biggest expense is reaching a new customer. If you succeed to winning him over to the point that he pulls out his wallet and gives you money. . . he will often continue to give you money if you offer something else. Yet, you do not need any expensive advertising to do this hes already listening to you. You simply have to open your mouth and offer him something else.

Savvy small-business owners will have something more expensive to sell, and something less expensive. Something else that fits in with whatever the initial sale was. . . and something else that just has broad appeal. But they will always have something on the back-end.

5) Outsource Judiciously

One of the battle cries in business today is to determine the one thing that your business does best, become even better at it, and outsource absolutely everything else. There is certainly a lot to be said for taking a careful look at every function in your business and asking yourself if you should outsource it. But take a hard look at the numbers before you decide to jump on the outsource bandwagon!