How to Increase the Business Margins from small to Big

Building a Business in low margin sector is not so easy today, as the rise of Competition. And to build a long term successful business, we need to explore other high margins sectors. In this blog, we'll explore how to turn your small Margins into a Big Margin Business.

 

Move up in the Business Value chain

Imagine you run a successful coffee shop known for its unique coffee blends. You've noticed that your regular customers often stop by for a quick breakfast.

 

To make more money, you decide to start offering breakfast options. You introduce delicious and healthy breakfast items that go well with your coffee. This not only serves the needs of your existing customers but also attracts new people looking for a convenient and tasty breakfast place.

By expanding into this related area, like offering breakfast foods, you not only sell more to your coffee-loving customers but also bring in a new crowd, making your business more profitable.

Some Related Case studies to this

MRF is a well-known Indian company famous for making tires. But it didn't start that way. It began as a place making rubber balloons. Over time, they decided to make high-quality tires, and they didn't stop there. MRF takes care of the whole tire-making process, from growing rubber to making the final product. This way, they have better control over their tires' quality.

Similarly Reliance is another big Indian company, and they do a lot of different things. Think of it like this: in the oil and gas world, they're like an explorer, a refiner, and a maker of special chemicals all rolled into one. It's as if they look for oil, turn it into useful stuff, and then make even more special things from it. They cover everything from start to finish, making their business stronger.

Move up to another Industry for Big Margins

Transitioning to another industry for higher margins involves strategically entering a different business arena to explore fresh opportunities and boost overall profitability.

 

By venturing into another industry, you're aiming to tap into markets with greater growth potential or where your unique strengths can shine even brighter.

This strategic move requires careful

1. Research
2. Understanding of the new industry's dynamics.
3. Ability to adapt your existing skills and resources.

Sell wherever it can be sold

Expanding the reach of your product to every possible market is like unlocking its full potential. It helps to ensure that your product is accessible in various places, like setting up your lemonade stand not just on your street but also in the park, at the school fair, and online.

Let’s take an example of MRF types about this

Initially recognized as a regional player, MRF strategically expanded its distribution network to cover not just cities but also towns and rural areas. The company ensured that its tires were available not only in exclusive tire stores but also in multi-brand outlets, automobile service centers, and online platforms.

This extensive reach allowed MRF to cater to a diverse customer base, from urban drivers seeking performance tires to rural customers in need of durable and reliable options for various vehicles.

Strategic Tie up

 

A strategic tie-up is like teaming up with a super friend to achieve big goals in business. It's when two companies decide to work together because they realize that by combining their strengths, they can do even more amazing things. It's a bit like superheroes teaming up to save the day! This collaboration allows both companies to share resources, knowledge, and special skills.

In the business world, these partnerships are carefully planned to bring out the best in each other and make both companies stronger.

Diversify the Business

 

Diversifying a well-established business is like adding new colors to an already impressive painting.

Imagine you have a successful bakery known for its delicious cakes. Now, picture expanding your talents into creating cookies and pastries. That's diversification!

In a business sense, it means taking the expertise and reputation you've built and applying it to a new market or product line.

For instance, if our bakery decides to step into the catering business for events, it's a fresh venture, but customers already trust the brand for quality treats.

This move into a new market doesn't just open up exciting opportunities; it allows the business to grow, tap into different customer needs, and, ultimately, paint a bigger and more vibrant picture of success in the business world.

Conclusion

From moving up the business value chain to exploring new industries and diversifying your offerings, each step brings its unique set of challenges and opportunities.

Selling wherever your product can be sold and forming strategic tie-ups are essential to expanding your business's footprint. These strategies not only maximize your product's accessibility but also harness the strengths of collaboration, allowing you to reach new horizons.

In the end, successful business growth isn't a linear path but a dynamic and evolving journey. By adapting to changing markets, diversifying, and seizing opportunities in related or new industries, you can significantly increase your business margins and take it to new heights. The key is to remain flexible, innovative, and open to change.

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