Revenue goes up and down, with seasonal changes, economic conditions and even the cost of raw materials playing a role in these fluctuations. If you want to maximize profitability, it’s time to be strategic.
Being strategic will allow you to stop profit stagnation and propel you forward so that you can reach your goals.
But where do you start on your journey to increase profits? That’s what I’ll explain in the guide below:
1. Clarify Your Profitability
How do you become profitable through your products and services?
You might need to rethink your offerings in 2026 by asking yourself two questions:
- What products or services have little demand?
- Which products or services can you focus on because they’re profitable?
It’s estimated that 42% of businesses fail due to a lack of product or service demand. You can avoid this fate by focusing on revenue first through due diligence:
- Review your products and services. List the price and cost of each and determine its respective profit margins.
- List the products or services that have the highest profits in their own list. You’ll use this information to learn which items to sell more of, and then address the least profitable ones.
- Product and service profit margins vary. It’s the nature of business. And there are occasions when you can switch suppliers or lower the cost per lead to increase profit margins. You can also increase product prices or eliminate low-performing goods completely.
Dig into your products and services to find which are profitable, which are stagnant, and which are under-performing.
Once you have this information on hand, you can make better decisions.
Dig into your products and services to find which are profitable, which are stagnant, and which are under-performing.
Once you have this information on hand, you can make better decisions.
Financial mistakes often occur because you’re “married” to what you sell. What was once profitable may no longer be, and you need to know when it’s time to throw in the towel and reallocate your resources to strengthen your market share.
Now, a natural question to have is: What do you do about your legacy customers or clients who purchase in larger quantities?
You can continue catering to this group, increase prices, or go all-in and drop these products or services. Work with an advisor who can help you decide on the best path forward based on each client’s revenue and profit margins. The important issue here is to be intentional and address this.
2. Pricing
Rather than nixing your low-performing products or services, consider increasing your prices, even if you need to “sweeten the deal.” By adding even something minor to the offer, you might be able to increase your margins.
A few options to consider are:
- Bundling: Add your products or services into neat bundles that encourage customers to buy more.
- Pairing: Consider pairing best-selling items with lower-selling ones that go together to increase potential profitability.
You know your costs already (hopefully), so take this time to consider strategic price increases. Can you improve your good products even further? What changes do you need to make to turn non-profitable goods into profitable ones?
Even if raising your prices causes you to lose some business, you’re still almost always better off. Higher prices help you earn more with less time and resources. You can then reallocate those freed-up resources to continue growing.
If the only path forward to increasing your prices is marketing, consider adjusting it to reach your goals.
3. Take a Fresh Approach to Marketing
Is your current strategy catering to where your ideal clients or customers are now? If not, it’s time to take a new approach.
Marketing is constantly evolving. Maybe your audience is on social media, or maybe they fall into a niche category of clients you need to connect with in person at specific events. In either case, your strategy needs to evolve with their changing needs.
Start by asking yourself:
- What’s actually working to drive sales?
- Which strategies haven’t been effective?
Some forms of marketing might be dying out. But your ideal buyers are still out there. You just need to find a way to connect with them with a message that resonates.
4. Improve Efficiency By Reviewing Key Processes
The best way to lower costs is to improve efficiency. Addressing bottlenecks is the key.
Processes may be inefficient and should be reviewed periodically to ensure they stay efficient.
Here’s a great example: I had a client who purchased materials in a certain format, and that format required extensive modification before it was usable in their manufacturing process.
That client never questioned the process because it’s the way they had always done it. But after talking to their supplier, we discovered they could purchase materials in the exact format they wanted. The end result? Saved time and energy.
A simple change in the way the client received the material instantly boosted efficiency and profit margins.
Look for little inefficiencies like these and find ways to address them. For example, you can adopt new technology to streamline tasks, or create new systems and processes to save your team valuable time.
5. Use Zero-Based Budgeting (ZBB)
If you want to maximize your profitability, zero-based budgeting (ZBB) is a great way to do it. The aim is to justify every expense to ensure you’re not overspending.
The drawback is that ZBB is very involved. It’s powerful and helpful, but resource-intensive.
That said, 43% of companies are using this type of budget to hit their cost targets.
How do you get started with ZBB?
- Start from scratch with a new budget. Don’t look at last year’s actuals.
- Analyze every single expense. Remove any unnecessary costs.
- Justify each expenditure so that you’re only spending when absolutely necessary.
- Identify ways to reduce costs without affecting efficiency or quality.
- Streamline, standardize and automate. Technology and AI can save you time and lead to long-term savings.
- Allocate your resources and finalize your budget.
Finally, make sure your documentation is clear and that all stakeholders are on the same page.
6. Create Short-term Goals
Creating short-term goals (those that are achieved in 2-4 months) can help guide your ship going forward.
Why just 2-4 months?
If your goal only takes a month or less to complete, it’s more of a milestone than an actual goal. Goals that extend past four months are too easy to procrastinate on.
For each goal you create:
- Break it down into smaller goals to get multiple people involved
- Allocate resources to it, even if that means taking something off of someone else’s plate to achieve it
Having goals to work toward will help you stay focused on growth and profitability.
But first, make sure that you’re operating efficiently and your pricing is on point. Then, create your strategies to achieve those goals you set.
Final Thoughts
As you move through 2026, find ways to implement these six strategies into your operations to boost your profitability and get more cash in your bank account.
Schedule an appointment to discuss how we can help you transition from sole proprietor to CEO.