7 Ways to Grow Your Business and Profitability
The Challenge
Sustaining and growing a business is a challenge.
Business conditions change, new competition pops-up, your customers’ wants change. Technology changes, regulations change, finance conditions vary, customers delay in making decisions … the list goes on.
Despite what we might think, the greatest challenge to business is not our competitors or other outside forces; rather, the greatest challenge is ourselves – our acceptance of change and our willingness to improve. Unfortunately, many people only make these changes when they are forced to.
Being an accountant is no different. I would estimate that 75% of the work we used to do when I started working nearly 30 years ago, when there were no computer programs (like Xero or MYOB), is now done by clients using their own accounting programs or bookkeepers.
Thomas Jefferson said more than 230 years ago: “if you want something you’ve never had, you must be willing to do something you’ve never done”… and so it is with business. If there’s a goal you’re aiming for with your business, then you must be willing to do something different to get there.
Success in most business is planned. It doesn’t have to be as complex as a formal business plan, printed and bound with every possibility covered … quite the opposite! It can be as simple as making the time to sit back and have a good look at your business and how it can be improved.
F2P=P2F (Failure to plan equals planning to fail)
Most of us fail to plan for our business. So much so that we put more time into planning where we are going on the family holiday than where our business (quite often providing our livelihood and paying for that holiday) is going! For those business owners that do plan, some fail to implement the plans or fail in the discipline to execute.
To prepare for business growth we should;
- set an annual improvement plan
- set an annual budget
- set key performance indicators (KPIs) that lead to achievement of the improvement plan
- have someone independent hold you accountable
In looking at any business there are 7 key areas that, if addressed and implemented correctly, will lead to an improvement in your business performance and profitability. While not all the areas may apply, most do for the majority of businesses.
In this article I will cover the first 3 points and next article the following 4.
No. 1: Build customer retention
It is much cheaper to retain an existing customer than to generate leads to convert a new customer.
Keep current customers happy by understanding what they value. We have all walked into businesses with a specific request, only for them to not listen and try to sell you something else. We need to understand what is important to our customers; not just on the first sale, but every sale.
Once we understand what our customers want, we then need to systemise it. The more something is systemised the easier it is to do on a consistent basis – both for yourself and your staff. Consider McDonalds and any franchise: they want the customer to experience consistency of service no matter which staff member or what location.
Within hospitality it may simply be introducing yourself and greeting a pre-booked customer, by name, or providing an unexpected extra. In the trades, it could simply be turning up on time and in a tidy uniform.
Work out what your customers value by asking what they remember about your service. Value is rarely associated with performing core processes; it is more often linked to how customers feel.
No. 2: Generate more leads
The best method of generating leads is word-of-mouth or referrals. What can you do to encourage your customers to refer you to a friend or another business? It could be offering the original customer a reward like movie tickets, or a discount off their next service with you once the referred contact becomes a customer. This is known as a referral virus.
Other forms of marketing include: Facebook, LinkedIn, signage (when working on site), sponsorships, networking and direct approach to potential customers. Different marketing works successfully for different people and businesses; you should to experiment and work out what works for you. Marketing doesn’t have to be expensive and you can often try small activities to test the results and then build on what works for you. And remember, just because it worked yesterday doesn’t mean that it will work in the future, so don’t rely on what you have always done in the past.
No. 3: Increase conversion rate
Do you know how many quotes you win?
A good exercise is to calculate the number of quotes and subsequent acceptances. You will never get 100% … if you do you, may not be charging enough! If customers typically get three quotes for a job, are you winning at least 50% of your quotes? If not, why not?
There may be up to three people involved in a purchasing decision:
- the user
- the chooser
- and the payer
Are you dealing with the decision-maker? Sometimes the person who starts the conversation isn’t the one controlling the decision. Ask these questions upfront so you do know.
- Who do you need to discuss with to make the decision?
- What information can I provide you with, to help you?
- What is your timeframe?
Next time we will cover the remaining four areas for you to focus on to improve your business. Don’t sit back and wait for the next newsletter, review the areas above and work out how they can be implemented to improve your business.