Almost every small business owner and freelancer I talk to wants to grow their business. Growth doesn’t always mean more money. Growth could mean more profits. Growth could mean less work while keeping your revenues stable. Growth could mean more ideal customers and less non-ideal customers. That’s why I sometimes describe what we do at Coracle Marketing as helping small business owners “grow the way they want.” Every person has a different vision of how they want to grow their business. But whatever your definition of growth is, there are three main ways to achieve this.
Grow Your Business Through Increased Sales
The most obvious way to grow your business is to have increased sales or revenue. More product or service sold equates to more growth. The formula is simple. The majority of business owners that approach Coracle Marketing for help are looking to achieve this. They want a redesigned website, improved SEO, Facebook ads, viral blog posts, or other marketing campaigns so that they can increase their revenue.
There are three main ways to increase your sales:
1. Get New Customers – Another term for this is “customer acquisition.” If new people discover your business and buy your products, you will increase your sales.
2. Offer More Products – If your business can offer more products or services to your existing customers, you can grow your sales. One of my customers has recently discovered a new product that their customers could use, and has asked us to launch a marketing campaign to communicate the benefits of this new product to their current customers.
3. Increase the Lifetime Value of Your Customers – Of the three options, this one is the one that people do not think about doing, but is often the easiest to do. Lifetime Value (LTV) is a measure of the total amount that a customer will purchase from you in the lifetime of your business relationship. If you have a customer buy from you once, you can think about how to offer another product that improves the life of your customer so that they buy from you again. If you have a customer spend $2,000 with you a year, you can think about how to add more value to your customer so that they spend $3,000 with you a year. The focus on this option is thinking about how you can improve the quality of your product/service and improve the longevity of your relationship with your customer.
Grow The Capacity of Your Team
Another way to grow your business is to increase the capacity of your team. Some businesses that offer services measure this with “billable hours.” A billable hour is the time spent working that you can bill your client for. This is one of the KPIs (Key Performance Indicators) I use to measure the effectiveness of my team. In the first year of our business, Olive and I were at 21 billable hours per week. In year 2 we were able to increase that to 25 billable hours per week. For a business selling products, one way to measure this is the production capacity of your team. For example, if you are a company selling Yoda bobbleheads, how many are you making every week?
The quickest way to increase the capacity is to have your staff work more. This is often why you see some entrepreneurs work until late into the evening. It’s also why you see accountants work overtime hours during tax season. If you have a 3-person team that works 8 hours a day to make 40 Yoda bobbleheads a week, you could ask them to work 10 hours a day. They would likely be able to make 50 bobbling mini Yodas a week. It’s a short-term solution, because a person can only work so many hours in a day and keep it sustainable.
A more long-term solution to growing the capacity of your team is to hire more team members. More people means more work done. This process is a bit tricky. When you hire someone new, it takes time to train them (which takes away from your capacity to get work done). Some businesses say that it takes upwards of 6 months to get a new team member to be productive and profitable for the company.
A third way to grow the capacity of your team is to invest in training. With more training and experience, your team members will be able to increase their production levels.
The last way is to provide more or better equipment for your team, so they can get more work done. If you’re a printing company, you could buy another printer. If you sell mini donuts, you could buy another mini donut making machine.
Improve the Efficiency of Your Operations
The third way to grow your business is to focus on improving the efficiency of your operations. This means finding a way to get more work done with the same amount of resources (team members and/or equipment).
I have two customers investing in improving their operational efficiency. One of the customers, who has 18 employees, is in the process of selecting and implementing a Work Management Software. This is sometimes called a Business Management Solution (BMS) or Enterprise Resource Planning (ERP). This system will make their operations more efficient by centralizing data so team members can find information quicker, saving time by eliminating the need for the double entry of data, and making information organized so less mistakes are made.
The other customer has a team of 6 people, and they are developing standard procedures for how new customer projects are handled. In the past, the team members were completing projects each in their own way. This made it confusing for team members to help each other out. By developing a standard procedure that team members would follow, it will make it easier to pass off work to someone else, allowing team members to focus on doing work that they are gifted in. For example, their leading sales person will be able to focus on meeting more people because he can now pass off his administrative work to another member of the team.
Which Should I Focus on First?
Now that you know the different ways of growing your business, the question becomes which should you focus on first. Some business owners make the mistake of trying to do all three at once. This unfocused effort usually leads to mediocre results. My advice is to focus on the biggest bottleneck first.
Ask yourself:
– Does my team have more time or capacity to do more work? If so, then you need to focus on increasing sales.
– Are there more customers than my team can handle? If so, then you need to focus on improving capacity or efficiency.
Almost every business owner wants to grow. The biggest question is how. This is where the ability to think strategically is critical to the growth of a business.