I often get asked how do I grow my business and how can I find the time to make change.
My colleague Ollie Newbold wrote recently about the importance of profitable growth to increase business value, read that article here, and my last article looked at some ways to improve productivity and reduce the need for more staff resource which can have a positive impact on profitability but how do you get profitable growth?
Did you know you can see the impact from change in as little as 90 days by pausing the day to day, thinking differently about your business and customers, and focusing on a few key elements that need to be improved?
You need to explore the four ways to grow to see which is appropriate for the business:
- Market penetration. This comes down to selling more of your existing products to your existing market. It is the lowest risk approach as you are dealing with products and markets that you are familiar with;
- Product Expansion. This involves selling a new product into your existing market; or
- Market Expansion selling your existing product into a new market.
Coincidentally, businesses pursuing Expansion strategies will often look at acquisition to give them access to the new product or market. It carries higher risk as either the market or product will be new to you but can offer good opportunities for rapid growth;
- Diversification. This is a high risk strategy as you will be dealing with both a new product and a new market. I have seen it described as diworsification for that reason – things can go wrong.
Taking the time to consider small tactical steps to increase sales can help you make the changes quickly and start realising the benefits earlier. Successful ways to do so include:
- An accountant will always tell you to put your prices up. The key to success here is differentiation. If the only thing the customer perceives is different about your product is price, then that will be what they use to make a buying decision.
- When looking at sales we encourage people to look at the process and see where the weaknesses are. The number of customers you have is the result of the number of leads you generate multiplied by your conversion rate. If marketing is strong and generates good leads which failed to convert, maybe your sales process needs a review. Conversely, if conversion rates are high but leads are low, we need to look at marketing.
- Turnover is impacted by the number of transactions per customer and the average spend per transaction. We are looking for the customer to buy more often or buy more when they do, or both. Often customers will be using more than one supplier for your product so the opportunity is there to increase your share of that spend.
- When looking at sales, understand where the customer perceives the value to be in your product. Often the part of the product that costs the most delivers less value to the customer, with the value being in the part that costs less. A good example of this is in online retailing, where the returns policy is key. Quick, easy and inexpensive returns are essential to the customer and cost much less than the product itself. Recognising that and doing returns well drives sales.
Delivering profitable growth may not be as problematic as you think. Once we have driven efficiency into the business it is time to focus on growth at both a strategic and tactical level.
If you would like more information on how to deliver profitable growth or challenge Will to make a positive impact on your business in 90 days, please contact us on 01242 776000 or email firstname.lastname@example.org.
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