Let me first preface this by saying that if you are over $10M in revenue, you probably don’t need to read this, because I am assuming you got there by doing the three things listed below. But if you are under that mark…well, read on.
As you work on your next-year projections*, you want to consider more than just increasing top line revenue. You need to think about other very telling numbers that also have an impact on your net income. Because just like dieting, it doesn’t matter how much exercise you do if you are eating wrong; you still won’t lose weight, right?
Well, the same goes for your business. Adding customers is not the only way to increase net income.
3 Tips to Increase Your Bottom Line
Here are three tips that you should focus on immediately to help increase your bottom line without adding even one more customer:
1. Redesign your contracts to include annual price increases.
I often see owners only increasing prices on new customers, and not on existing customers, when they feel the pinch on the bottom line. Or in the best-case scenario, they’ll increase prices once every three years on existing customers. But consider you may have 200+ existing customers, and you may only add 10+ customers a year. Also, consider that you are giving your people a 3% -5% pay increase annually. I can say with certainty that you are losing money, even if you are increasing prices for new customers.
Not one customer (if they are good) will ever be concerned about a 4% – 5% increase in services annually. Let’s say, for example, you bill $5M a year. A 5% increase will drop $250K to your bottom line. And if you sell next year, this will add between $1,000,000 and $1,500,000 to your sale price. Worth it, wouldn’t you say? Now is the time to implement this! That may mean sending out an addendum to your existing customers that modifies their current contract, but it is certainly worth the effort.
2. Determine your revenue per employee.
It’s a simple calculation. Take your total revenue for 2024 and divide it by the number of employees. So, continuing our example above, let’s say we have 20 employees. That means our revenue per employee is $250K. In my opinion, that is the baseline, and you should be striving for numbers larger than that. Which also means you should not hire employee number 21 until you have increased annual sales by at least $250K. My personal last company that I sold averaged $450K in revenue per employee. I made it a point of NOT hiring another person until I increased my annual TTM revenue by $450K. This should be a calculation you do on a semi-annual, if not quarterly, basis.
3. Sell more to existing customers.
In fact, you should have someone dedicated to this in your company, whether that is a salesperson or an engineer that loves to showcase new products. Selling to existing customers will generate more profit than continuously hunting down new customers. I am sure you have heard that before, so why are you ignoring this advice? I could count on 25%, if not more, of my additional sales for the year to come from existing customers. And I am always amazed how IT service providers just forget about this and, instead, solely focus on hunting for new ones. If you are uncomfortable calling and selling, then create a video(s) of existing products or new products you now support that your entire customer base is not using. Include a quick overview of the benefits and features, which then can lead then to another video of a demo. Keep these on your website so that your customers’ employees can share them with decision makers. Then, track who is watching them or, better yet, add a downloadable PDF with the product overview which requires them to give you their email address. Any ESP can handle this. Again, going back to my earlier example: selling 25% more to the existing customer base, you can add at least $100K – $125K to the bottom line, depending on your margins, which can add $500K – $750K to your sales price.
Conclusion
While skipping your daily latte might save you a few bucks, it’s not going to build a sustainable path to wealth. The real growth lies in making smarter, scalable decisions within your business. By implementing annual price increases, optimizing revenue per employee, and focusing on upselling to existing customers, you can significantly boost your bottom line and overall business valuation.
These strategies are not about cutting corners — they’re about creating lasting value and ensuring your business operates efficiently and profitably. So, as you work toward your yearly projections, don’t just aim for revenue growth; aim for smarter, more impactful growth. Small, intentional changes today can lead to massive payoffs tomorrow.
Your wealth isn’t in the coffee you skip — it’s in the strategy you implement.
* Any company over $3M in revenue should create an annual forecast, if only for yourself. It’s a way of looking at and reminding yourself of the goals you have set by month.
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