Why grow?Many people set up their own business because they enjoy the freedom of controlling their own affairs. However, growing a business is often seen as an unwelcome distraction, with many business owners believing that they can't afford the time, are too busy or are happy with how things are. All of these are understandable, especially in today's economic climate. But, you need to think about where the business is ultimately going, and whether you want to keep running it indefinitely, grow the business, sell it on, or close it. Dealing with Growth
If you want your business to grow, you need to decide how, where and why, - and what growth means to you. Many people believe that business growth is all to do with turnover, and staff numbers, but healthy growth comes through increasing your bottom line in the most cost effective way.
Assessing the base from which you will grow
Before you plunge ahead with growing your business, you need to be sure that you have a strong enough base on which to build. Otherwise, you will only destroy much of what you have built so far. This means looking at a number of key areas:
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Your resources
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Your experience
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Your management control
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- Your staff
- Your leadership
- Your ideas
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A number of questions need to be answered in each case, to build up an idea of your strengths and weaknesses. Divide the weaknesses into those that can be remedied easily (eg taking on another member of staff) and those that cannot (eg inadequate premises).
So, what do I do now?
You have to decide whether your strengths are sufficient to enable the business to grow, or whether there are any shortcomings, which can ruin your plans. It is amazing the perception we have of our own business, sometimes we think it is better or worse than it actually is – you need to be realistic before you can move forward.
If you are now ready to move forward, there are some strategies that can help:
Generating more reliable customers – let them be your sales force
Customers are the lifeblood of your business; we spend a significant investment in attracting new customers, but very little effort in retaining them. Research shows that the cost of keeping an existing customer is just 10% of the cost of attracting new ones. A happy customer can not only lead to repeat sales, but can also be an advocate for your business, leading to cost effective marketing and an increase in personal referrals.
Increasing your sales
Many businesses believe that to increase their profit, they merely have to increase the amount they sell. Actually, it remains one of the most difficult ways of increasing underlying profit. You have to plan for an increase in sales, and know when the increased effort will pay you back. If it fails to – then drop it.
Increasing the Profit Margin
‘Turnover is vanity, profit is sanity and cash is king' – it may always sound like a cliché but the difference between profit and loss can be the difference between your business growing and failing. Review your portfolio of unprofitable customers on a regular basis. It makes real commercial sense to concentrate on the most profitable ones. The 80/20 rule applies here – 80% of your profit will come from 20% of your customers. Should you spend so much effort dealing with the other customers that bring you in so little profit?
Reducing Costs
It seems a relatively easy thing to do, reduce your costs and increase your profit, and yet so many businesses that have attempted to grow have failed to keep their costs under control. Costs can be a part of the business that you will have a medium of control. For example, you can decide to move to cheaper premises, change suppliers or reduce any wastage that occurs in the business process of getting your goods or services to the customer.
Raising Prices
So many businesses believe that the last thing that they can or should do is raise the price. But time and time again people are willing to buy from businesses they trust, which is why reputation and customer retention is so important. You may inevitably lose some customers as prices go up, but your profit from those that remain should be greater. Remember –there is a big difference between being the cheapest and being the best.
Conclusion
Preparation is key, and making sure you have the skills in place is vital. This is where Centre for Business can help. As
one of the biggest business support agencies in Wales, we provide a wide range of support to businesses, through our own business training and advisory teams and with help from a well established partnership network. For help contact us on 01633 211639, or fill out our
business services advisor request form.