Business growth rarely happens by accident or by osmosis. A growing business is usually the consequence of a business strategy successfully deployed in order to achieve that specific outcome.
The highest rates of business growth can be achieved by combining four separate strategic directions into a well designed, consolidated, and highly focused effort to:
- acquire more new customers/clients,
- sell more products/services to the existing customer/client base,
- improve profit margins by raising prices and/or reducing the costs of supplying the products/services, and
- increase the existing retention rates of current customers/clients.
Acquiring More New Customers/Clients
The most commonly used strategy to promote business growth is to adopt a business strategy directed at quickly acquiring more new customers. Customer acquisition takes many forms including:
- advertising special price offers,
- offering various incentives for new customers/clients,
- introducing referral programs for existing customers,
- increasing sales people’s commissions for a limited period,
- stepping up trade show activities and frequency of current advertising, and
- purchasing an existing customer/client base.
Managed correctly, any or all of these methods of customer acquisition, can prove to be cost effective and efficient at delivering the desired outcome.
Selling More Products/Services to the Existing Customer Base
Theoretically, this should be the most cost effective and most efficient way of increasing business revenue as customer acquisition costs are nil, the customer/client knows and hopefully trusts the business to deliver what is promised, and permission based lines of low, or no cost, communication are already open.
In practice, it is not as easy as it might first appear. To sell more than the customer/client currently purchases, a business needs to:
- encourage greater demand for products/services currently purchased,
- create in the customer’s/client’s mind a desire/need for products/services that will then facilitate a successful upsell situation,
- consider offering free trials of different products/services that may benefit the customers/clients,
- provide rewards that acknowledge repeat business and encourage greater future loyalty, and
- make it as easy as possible for existing customers to purchase from the business in the future.
Raising Prices and/or Reducing Costs of Supplying the Products/Services
Increased profitability can assist tremendously in funding future business growth. Three common means of increasing profitability are to:
- Increase current prices whilst maintaining the existing cost structure,
- Maintaining the current prices whilst reducing existing costs, and
- Increasing prices and at the same time reducing costs.
The trick here is to be able to select the right time for a price rise and knowing when a price rise is out of the question. Get it right and business will prosper. Get it wrong and watch sales plummet.
Increase Existing Customer/Clients Retention Rates
An area that does not get as much attention it deserves in business strategy formulation, but one that is very important in maintaining business growth, is the desirability of increasing customer retention rates.
Customer retention rates can be increased by:
- improving the customer/client experience in their interactions with the business,
- enhancing the levels of customer/client service experienced at all business touch points,
- introducing loyalty programs to reward repeat customers,
- providing two way communication platforms with customers, and
- delivering exclusive offers or special discounts to existing customers.
The Power Combination of all Four Approaches Gets the Best Outcome
Each of the approaches outlined above will, in isolation, deliver a level of impetus to aid business growth.
Simultaneously deploying as a deliberate business strategy, all four approaches (Customer Acquisition, Product/Service Upsell, Raising Prices/Reducing Costs, and Increasing Customer Retention rates), will have a far greater effect on the overall business profitability, and significantly support the objectives of business growth within a measured time frame.
How to Write an Effective Small Business Plan
Small business owners are sometimes intimidated by the process of writing a business plan and that is why they would rather not do it. The rationale is there business is small anyway or they are no MBA but just a simple business owner.
Developing a business plan doesn’t necessary have to be a complex task. It does require a conscious effort and research to record an organized plan with a profitable business in mind.
Before writing the business plan, it is important to outline personal qualifications. Accomplishments and past business history, if available, are background indicators on qualifications to operate the business. If the plan is mainly designed to direct business activities and not to generate additional capital, this information can be down played.
To write a business plan for small business here are straight forward steps to do. How much detail and effort can be put in will depend on the business owner.
Identify the Business Plan Purpose
An effective business plan is meaningful. It is done for the purpose of business activities by clearly outlining the business goals and objectives, and to generate financing, if needed.
Define the Business
The first plan of the business plan should clearly identify the business and services that goes with it. It should clearly explain what the business is about and its offerings.
Define the Target Market and Industry
The targeted market sector should be defined. A clear idea of the audience helps narrow down marketing efforts. Researches, for example, on geographical location, general census on social, economic and educational aspects, and population coverage can be done online or from local libraries. They serve as salient information for business marketing projection purposes.
Alongside definition of the target market, the business plan should provide information about the industry being operated in.
Know the Competition
In researching the market and industry, it is important to have a feel for competitors’s presence. Their strengths and weaknesses are indicators for possible threats as well as opportunities for the business.
Do the Financial Data
This is the financial plan math. Enough time should be spent to come up with the realistic figures, and not just rushed assembled estimates. Important inclusions include capital information for funding the business, sales projections and expenses, and the estimated earnings.
Package the Small Business Plan
Properly packaging the small business plan is especially significant if the plan will be submitted to investors or to the banks for financing purposes, and therefore, it should prove viable, at the same time, conservative.
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