what small businesses can do to increase profit

 What small businesses can do to increase profit

·        It is so liberating to own your own small business. You don’t have the anxiety of getting fired if you don’t perform well in your job. But a different anxiety arises. How will you meet your sales target every month? Without sales, you will not be able to pay your business and personal expenses. Here is an idea to try out.

STEP ONE:

First form a group with other small businesses in your area. Make sure you don’t overlook anybody’s business. In this group elect officials who will be in charge.

STEP TWO:

Let’s say this group has 1000 small businesses. The next step is to ask for contribution. It can start at about 100 shillings per month. The treasurer will then be in charge of the 100,000 shillings in cash. Some of this cash can be used to print coupons. One of the businesses in the group can be given this task. A coupon is a document that can be redeemed for a financial discount e.g. if you have a coupon of 50 shillings, you can redeem it to buy a loaf of bread. These coupons will then be distributed to all the businesses in the group. When a customer purchases goods in any of the participating shops, he/she gets a coupon equivalent to the amount of goods they purchased e.g. if you buy goods worth 100 shillings, you get a 5 shilling coupon. If you buy goods worth 1000 shillings you get a 50 shillings coupon and so on. This can help all the participating outlets because if let’s say a customer only buys basic goods like food from the local vegetable vendor, he/she will accumulate coupons with every purchase. Once a customer has enough of them collected, they can then go and purchase something else that they like for example clothes, furniture or airtime. So the vegetable vendors benefits because they are able to record higher sales and the other businesses in the group benefit because their sales will also increase. So everyone is happy. Three problems however arise.

·         How do you deal with fake coupons?

·        What do you do if the coupons get exhausted before the month ends?

·        How do you deal with rogue businesses who will just give all their allocated coupons to one person e.g a family member to redeem?

Here are some solutions

How to deal with fake coupons

This problem can be solved by making the coupons hard to duplicate. If you live in an urban area, you may opt to make the whole process digital. This can be made cheaper if your group has a computer programmer. Customers can create user names and there phone numbers can be used as their unique identifiers.

What to do if the coupons get exhausted before the month ends

In the above example that I used the total contributions was 100,000 shillings for the month. This amount could be tiny compared with the total sales of all the 1000 businesses. The solution to this problem could be to set aside some money e.g. 20,000 shillings. Next, print raffle tickets. You can print as many as possible (even 500,000 tickets) Raffle tickets can be given with the coupons and after the coupons are finished. Then once a month, a draw is made and the customers with the winning tickets get prizes equivalent 20,000 shillings. The first prize could be furniture made by someone in the group. All the other prizes could also be products from the other members of the group. It could be a good opportunity to advertise the group’s products. The problem with this idea is that some people could make fake raffle ticket. This can be solved by making the tickets difficult to duplicate or make them digital.

How to deal with rogue businesses who will just give all their allocated coupons to one person to redeem

Some people are very corrupt. They can just take all their allotted coupons and raffle tickets and give to one person. This problem can be solved by creating social media sites for the group. Once someone feels that one of the members is doing something that goes against the rules, he/she can alert everyone and investigations can proceed. This can help weed out the greedy people in the group.

Conclusion

Every month the contributions for the group could increase depending on the success of the above processes. Any new member to join should pay a larger sum because they will be benefiting from all the hard work done by the founding members. Elected officials should not stay in office for too long since power corrupts. Efforts should be made to make sure EVERY member of the group benefits from this arrangement.

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