10 Proven Strategies for Improving Profit Margins in Your Small Business

Many small business owners in the textile and garment industry tend to fixate on their top line of growth. If you’re not familiar with the term, it refers to the increase in gross sales or revenue over a period of time. It’s indicative of a business’s potential for growth while also being a relatively reliable metric for its financial strength. But while top-line growth is certainly vital, it’s not the most important factor to pay attention to.

Profit Margins in garment business

If you’re a small business owner, maximizing your profit margin should be your number one priority. Knowing how to practically monitor and improve your profit margins is a complex and stressful task. After all, the success of your business is on the line.

That’s why we’re here to guide you through 10 practical strategies proven to increase profit margins for small textile and garment businesses.

1. Improve Operational Efficiency:
This point may seem like a no-brainer. Businesses that have taken the time to ruthlessly assess their efficiency have been surprised to discover that it’s rarely optimal.

Once you’ve identified factors that you can improve upon—this may be your production line, management structure, or distribution procedure—you can eliminate unnecessary waste, propel productivity, and ultimately bolster your overall profit margin. This will not only help your bottom line,  but it will also help you to forecast sales in the future.

2. Invest in Strategic Partnerships:
Developing strategic partnerships is one of the most favorable strategies for rapidly increasing the profit margin of your business. That said, the partnership must be complementary and enhance the image of your product or service.

A partnership can take on many different forms. You may opt to enter into an agreement where you mutually promote a related business, such as one that supplies you with the zips or buttons you use in your garments. Alternatively, you can invite suppliers to collaborate with you in exchange for better prices.

3. Prioritize Customer Retention:
Unfortunately, acquiring new customers is far more expensive than retaining existing ones. If you can keep your customers satisfied, they’ll return to you for repeat business whilst also recommending you to friends and family, thus creating a positive and profitable snowball effect.

Providing superior customer service and offering personalized specials to loyal customers are just two examples of ways that you can bolster customer retention.

4. Technology is Your Friend:
Investing in technology may feel like an excessive expense but it certainly pays off in the long run. Technology can automate laborious processes such as creating patterns or tracking quality control. It makes the completion of tasks more efficient and it likely does so in a highly accurate and consistent manner. This saves your precious time whilst eliminating the margin for human error. Ultimately, this improves the overall operational success of your small business.

5. Identify Low-Margin Products:
It’s crucially important to recognize which products bring in a high-profit margin and which don’t. If you’re unsure about this then it’s absolutely worth thoroughly investigating your sales data. You’ll also need to learn how to calculate profit margins to ensure that you have an accurate reflection of your sales and the revenue they’re generating.

Once you’ve identified the products with the smallest profit margin, you can begin to weigh up whether to continue producing them or remove them from your offering. They likely demand a significant amount of attention and resources. Sometimes cutting back is actually an essential part of growth, especially for small businesses.

6. Elevate the Perceived Value of Your Product:
In the competitive textile and garment industry, marketing will ultimately determine the fate of your business. You could produce products of the highest quality and deliver world-class services. But if you cannot communicate this to prospective buyers, then your business is doomed.

Creating a personal or emotional connection with customers enhances a sense of perceived value. This means that someone is more likely to make a purchase and you’re one step closer to attaining your end-goal profit margin.

7. Boost Average Order Values:
This builds on point 3 of “prioritizing customer retention”.  Increasing the average order value of existing clients is a highly efficient way to improve your small business’s profit margin. If someone has already made the decision to purchase a product from your business, then they value your brand. You need to capitalize on this.

A strategy that’s particularly effective for online clothing stores is strategic product placement. You could advertise complementary or related products in the sidebar of the open page. Another popular trick is to place your best sellers in high-traffic points on your website. Whichever way you choose to go about it, enhancing existing order values is an excellent strategy for increasing your profit margin.

8. Maintain Momentum:
Reducing your total turnaround time will reduce the number of your overhead costs. For example, having a shorter order-to-delivery time will minimize the storage fees associated with products in transit. Perhaps there are steps which can be completed ahead of time.

You might even be able to automate these processes, or at least utilize a set template. Either way, you must ensure your small business maintains momentum to ensure customer satisfaction while also increasing your profit margin.

9. Review Pricing:
There is no one-size-fits-all strategy for increasing prices. It will depend on your current pricing structure as much as it will on your customer base and broader economic context. Thorough research on competing businesses will help you to identify that ideal middle ground which allows you to maximize overall profit without driving away existing customers.

10. Review Costs:
Cutting back on business costs is one of the most straightforward ways to improve your profit margins. You may feel a certain pressure to always ‘go the extra mile’ to cement customer loyalty. While this is certainly a valuable attitude, you can probably cut back on some things.

For example, if your small business deals in product sales, then you may want to reconsider your packaging. Minimalism is back in style. You don’t need to wrap your delivery in luxurious ribbons and tissue fill. Opt for cheaper alternatives, and preferably ones that are eco-friendly too. This will boost customer goodwill as there’s an increasing focus on sustainability in fashion.

It’s estimated that by 2030, the global textile market will reach $1,420.3 billion. It’s clear that this is  a booming industry and that there is the potential to generate large sums of money. You simply need the right tools to do so. Use these tips to improve your profit margins and grow your business to ensure that you gain a strong foothold in the market.


  1. ​​https://articles.bplans.com/how-to-increase-revenue-for-your-clothing-business/
  2. https://www.onlineclothingstudy.com/2012/01/ten-strategies-to-improve-profitability.html
  3. https://www.freshbooks.com/hub/accounting/calculate-gross-margin
  4. https://www.fibre2fashion.com/industry-article/9123/5-strategies-to-improve-profitability-in-the-apparel-business
  5. https://news.climate.columbia.edu/2021/06/10/why-fashion-needs-to-be-more-sustainable/
  6. https://www.prnewswire.com/news-releases/global-textile-market-to-reach-1-42-trillion-by-2030-at-a-cagr-of-4-301584604.html

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