For many small business owners, the first few years are simply a struggle to survive. Prioritising business growth may feel scary, but it’s the secret to getting past the break-even point and transforming your small business into a bigger and more profitable enterprise. We’ve put together a list of five growth strategies that can see your business grow from a tiny company into a commercial powerhouse.
1. Customer Retention
Your existing customers are the secret to generating more profit. Research by Invesp shows that it costs five times more to acquire a new customer than to retain an existing one. Furthermore, existing customers are 50% more likely to try new products. The overall probability of selling to an existing customer is between 60-70%, whereas this figure dwindles to just 5-20% when it comes to new customers. Finally, existing customers spend an average of 31% more than their newer counterparts.
These statistics clearly show that it pays to prioritise existing customers. Whilst it is necessary to acquire new customers in order to grow your business, you should not forget about your current ones, either. Show your appreciation for the people who have supported your business thus far by offering discounts, creating rewards schemes and providing free samples of your latest products and services. Don’t reserve your best deals for new faces!
2. Encourage Referrals
Your existing customers don’t just help to increase your profits, they can also bring in new business. Incentivising your customers to bring in their friends, family and colleagues with the promise of a discount or reward can really help to grow your customer base. What’s more is that a referral program is a low-cost and low-risk strategy, because you don’t have to pay out until after you have secured a sale.
3. Cut Costs – But Be Smart
Growing your revenue sounds good, but not if your costs are increasing at an even faster rate. Focus on your bottom line and make an effort to keep costs down to ensure that your profits grow in line with your turnover.
With that being said, you need to carefully consider the impact of cutting each cost. It’s important that your cuts do not decrease the quality of your customer service or have a detrimental impact on staff morale. Satisfied customers and employees are both crucial to business growth.
The best thing to do is take a careful look at the ROI of your costs and make smart decisions. For example, you could try shopping around with suppliers, making your offices more eco-friendly in order to save power, encouraging remote working and better managing your inventory. It’s also worth getting rid of products and services that do not generate a significant amount of money and focusing more on the areas of your business that really drive profit.
4. Extend Market Reach
Extending your market reach is a powerful way of growing your business. You can make your products and/or services available to new customers in the following ways:
- Opening stores in new locations. This could mean opening a brick-and-mortar location in a new town or city, or expanding to sell through new e-commerce websites.
- Identify a new target market. Once your product is performing well amongst your initial target demographic, research whether there are other groups who your product or service may be able to help.
- Find new reasons to sell. Can you put a new marketing spin on a current product or service? If so, this could really increase your sales.
5. Target a Niche
A small niche market gives your business the opportunity to dominate and become the go-to provider in a specific field. To find a niche, identify a current subset of the market whose needs are frequently ignored or overlooked, and focus on speaking to that specific group. If you can create marketing that makes these prospects feel seen, heard and understood, you will be sure to generate new sales.
The most powerful growth strategies will vary from business to business. Before diving in, consider your resources, the unique needs of your business and the interests of your ideal client. Choose one or two of the above strategies and create a systematic plan for growth accordingly. With time and consistent action, you will see your small business begin to grow.