As a small business owner, you’ve probably encountered the natural ebbs and flows of running a business. The initial excitement of launch may have already worn off, and now it’s time to buckle down and focus on taking your new business to the next level. With that in mind, here are some of the best tips for turbo-charging small business growth.
Tip #1: Build in variance to your business models
The only certainty of running a small business is that there will be plenty of uncertainty. Financial forecasters have a term for this uncertainty – “variance” – and it refers to all the swings (both up and down) in the various factors that impact your business. For example, consider your monthly sales. This sales number might vary widely from one month to the next, or from season to season. Some businesses are very dependent on the final month of the year, when a lot of their customers are making holiday purchases. Other businesses – such as ski resorts – may only be profitable for a few months of the year.
As a result, you will want to build in this variance to your business model. If your sales projections, for example, show steady growth on a month-over-month basis, you’re going to encounter enormous difficulties if sales suddenly dry up just when you need them most. This is a common concern for fashion retailers. If they are expecting huge sales for sweaters and winter coats, but then the winter is unseasonably warm, they could be left with a huge amount of unsold inventory. So your job as a business owner is to be able to anticipate – and then plan for – this variance in operating results.
Tip #2: Use diversification to reduce your risk exposures
Perhaps the best way to plan for variance is by embracing diversification. Most importantly, you should attempt to diversify your customer base. As a general rule of thumb, any single customer shouldn’t account for more than 10 percent of your overall sales. By diversifying your customer base, you can protect your business in the event that your best customer decides to switch their business to a rival competitor.
Moreover, you can use diversification to reduce risk by looking at ways to extend your product line. For example, think about the typical supermarket shelf in your hometown. There are probably many different options just for a single product. There might be a “regular” version of a product, and then a “low fat” or “gluten free” version, and possibly even a “kids” version of the product. Those are all examples of product diversification. The same is true for services as well. For example, if you run a restaurant business, you might think of ways to create a catering or delivery side business to diversify your regular dining-in options.
Tip #3: Make customer satisfaction your top priority
Customers are the lifeblood of any business. While any business will always have a certain amount of churn, your goal should be to hold onto as many customers as possible. And that means keeping them happy. You should consistently under-promise and over-deliver.
Moreover, you can’t assume that customers are satisfied just because they keep coming back. There might be hidden frustrations with the products you offer, or mounting dissatisfaction with some service that you provide. As soon as a competitor offers a better product, these customers might leave. Your goal as a business owner, then, should be to discover all these issues before they become full-fledged problems.
Tip #4: Find low-cost online marketing alternatives to build your client base
Too many small business owners assume that marketing has to be an expensive endeavor. Thus, they often miss out on low-cost (or free) alternatives to build their business. The reality is that you no longer have to advertise on TV or radio to get the word out about your small business. And nobody buys print ads in newspapers or magazines anymore.
Instead, your marketing focus should be on low-cost online alternatives, such as social media. The cost of setting up and operating a Facebook page for your business is zero. The cost of running a Twitter or Instagram account is zero. You get the idea – these are all low-cost, flexible options for growing your business that won’t break the bank.
Tip #5: Be open to new business opportunities
As much strategic planning as you do for your business, there will always be surprising opportunities that open up, seemingly out of nowhere. For example, we’ve all heard stories about what happens when a female celebrity is spotted wearing a certain shoe or a certain dress: all of a sudden, the entire Internet wants to buy that product.
That’s an extreme example, of course. But think about new trends that have transformed entire industries, creating new opportunities. For example, consider the way that the “organic trend” has transformed the way we buy food today. That was an opportunity just waiting to be seized. Other trends involve changes in technology. For example, the whole mobile revolution has transformed the way customers interact with companies. If you don’t have a mobile-ready website these days, you’re missing out.
Tip #6: Make cash flow your top financial priority
The conventional wisdom is that growing sales is the most important factor in growing a business. The reality, though, is that there is a financial metric even more important to the long-term health of your business, and that’s cash flow. Cash is what keeps the lights on at night, and cash is what pays employee salaries. If your business has a cash flow squeeze, it could have severe implications for your business.
For example, what happens if your customers take 60 days to pay and your bills are due in 30 days? That sets up a potential cash flow squeeze as you struggle to find new sources of cash while waiting for customers to pay. Or what happens if you used all of your free cash flow to purchase new inventory that nobody wants to buy? That might lead to a severe liquidity problem. You don’t want to be that business with a giant sign in the window that reads, “Going out of business. Everything must go!”
If you are looking to turbo-charge growth at your company, it’s important to develop a broad understanding of all the various stakeholders – customers, suppliers, investors, employees – that will determine your ultimate success. By following the six tips above, you will be able to put your company in a solid position for future business growth.