Best-selling author and business coach, Brian Tracy shares pertinent information on the things you can do to make more money and grow your business.
Growing a company (any company) in today’s tumultuous economy is challenging. And, when it’s a small business looking for more revenue and profit, growth can seem like something that’s never going to happen.
According to business mentor, author of more than 70 books on business tactics, motivational public speaker and self-development expert, Brian Tracy, growth can be achieved if business leaders are prepared to fight tough fights and take on the challenges that all companies face when seeking improved turnover. “Growing a small business takes a lot of sweat, hard work, and sleepless nights,” he says.
The challenges of growing a business
Starting a business might seem like a great success in its own right, but when it comes to growing it, there are common challenges that every company encounters at one point or another.
Some of these big-ticket challenges for all companies include hiring the right people, building their brand image and implementing easily replicable systems and processes.
Related: Attracting star clients
It can be argued, though, that there are particular challenges unique to small businesses that are looking to grow:
1. Depending too much on one client
It happens in small businesses. They depend on one large client for a major portion of revenue and when that business decides it’s time to shift strategy, the revenue model (and strategy) they’d been depending on no longer holds any truth.
Andrew Beattie, Investopedia author and business analytics specialist, says:
“Unfortunately, client dependence can lead to long-term handicaps because, even if you have employees, you might still be acting as a sub-contractor for a larger business.”
He explains that situations like these allows your client to avoid the risks of adding payroll in an area where budgets may dry up at any time.
“All of that risk is transferred from the client to you and your employees. This can work out fine provided that your main clients have a consistent need for your product or service. However, it is generally better for a business to have a diversified client or customer base to pick up the slack when any single client quits paying,” he says.
2. Spending too much money on acquiring clients
The amount of money you have to pay to acquire each new paying client for your product or service, regardless of whether you’re a small B2B or B2C company, can quickly escalate and eat into any growth potential. Marketing costs money, and this is an area that most small businesses feel hesitant to allocate funds toward. Nevertheless, marketing’s an essential part of growing a business.
“You must continually seek creative ways to improve your marketing costs.” – Brian Tracy, author, business coach, public speaking veteran
Brian Tracy explains that too many companies don’t track their leads back to their marketing spend. If you don’t monitor it, the marketing cost of acquiring each new client could eat into your profit to the extent that any added revenue is meaningless to your growth. Acquiring new clients is a challenge that can be overcome though, if you get creative, as Tracy advises.
“The purpose of business is not to make a profit. It’s to create and keep a client. You want them to come the first time, then come again and finally bring their friends. How you do this is directly related to how many satisfied clients you have. To grow, you have to listen to your clients and be involved in their buying experience.”– Brian Tracy
Related: Increase your number of clients
How to successfully grow your business
In one of his must-watch YouTube videos, Brian Tracy says that despite the challenges standing in the way of your growth, you can become a bigger, more successful business if you consider his tips below:
1. Increase your number of qualified leads
Consider focusing on increasing the number of qualified leads you attract when growing your small business. If five out of every 10 prospective clients end up buying from you, and you raise the number of prospective clients to 15, you’ll effectively raise your profit by 50%. This is as long as you ensure your marketing costs and operating costs don’t go up as you pursue new clients.
2. Increase the number of leads you convert into clients
Your conversion rate is an important area to focus on when growing your company because there’s no long-term gain in raising your number of qualified leads if you can’t turn them into clients. If you have one client out of 10 that’s shopping with you, and you successfully convert a second client, you’ll effectively double your profit. Work on your sales skills here; if you have staff, hire a sales development organisation.
3. Increase your number of individual sales
You can grow your business by increasing the number of individual sales you make to each new client that you acquire. This is also referred to as increasing the frequency of your sales. If you are able to increase the frequency of your sales (repeat clients) by 10%, you also increase your overall sales and profit by the same percentage.
4. Increase your profit margin for each sale
Your profit margin is the gross profit that you make from the sale of each product or service that you offer. You can either lower your costs or you can increase your prices to achieve more profit for each sale. Every rand that you raise in price, if you keep costs constant, will flow straight to your bottom line as profit. Every rand you reduce in the cost your product or service also goes to the bottom line as profit.
It’s important to decide which tactic will be best for your business. If you’re able to lower your costs and increase your prices, you’ll be able to unlock even greater profit from each sale you make. Assess your sales figures – if you’re already discounting to sell products or services, raising prices might not work for you. But if you’re able to reduce costs and keep prices where they are, you can still increase profit per sale.
Related: Will going multichannel make you more money?
How to get clients to spend more frequently
1. Boost your communication and interaction with clients
- One of the first steps to take when looking to get clients to purchase from you more often is to increase your communication frequency with them.
- Email marketing to your client base can work as a cost-effective method to keep in touch and alert clients to sales, business news or to launch new products or services.
- To distribute your emails in the form of regular newsletters, you can use tools like Mailchimp that allow you to send bulk emails from one platform and monitor whether those emails are being opened, read and interacted with.
- Just be sure you don’t become a ‘spammer’ because bombarding your clients with irrelevant emails might hurt your reputation. As a small business you need to build an ongoing relationship with your clients and show that you care, thus raising the awareness of your brand, and increasing your communication through email is a tried-and-tested tactic for growing companies.
2. Consider launching a loyalty and rewards programme
- Loyalty and rewards programmes, when executed efficiently, can boost the frequency of purchases per client.
- A loyalty programme for instance is a great way to increase purchase frequency as clients are rewarded for every purchase that they make, making them feel more valued for choosing to purchase from you.
- Remarkety marketing specialist, Joel Presman says that if clients are given a high number of points for each purchase they make (100 points versus R1), they are more excited by the loyalty offer. The more exciting you make your programme, the more likely they would tell other people about it too.
- Retail giant Clicks run a loyalty programme that rewards clients with points that they can redeem for items they usually purchase. The client can also use a combination of their points and cash to buy other more expensive items that the retailer makes better margins on. There are a number of loyalty programme providers in South Africa that can assist you in setting up a rewards system that encourages repeat purchases and bolsters client loyalty.
Move forward, plan ahead
Market and trading conditions continually change, so you need to revisit and update your business tactics on a regular basis. Focusing on ways to attract new clients and getting those new clients (and existing clients) to spend more might help you extract more profit.
Standard Bank’s business sector experts can provide you with key insights on what’s happening in particular areas of the economy and your business niche. Speak to us today and we can help you determine if now’s the time to grow your business.