As entrepreneurs and business owners we are always looking for ways to grow your business. More often than not we end up coming with a million ideas, and implementing precisely none of them. Why do we do it? Because we aren’t 100% sure that its actually going to increase our revenue. Or worse we implement ideas, spend hours/days/weeks/months building something, only to find out that no one wants what we are selling.
We want to increase the profits in our business, that is what we me mean by grow our business. Or it should be anyway. There is no point doubling the number of customers you have if it equals the exact same profit. That’s just more work for the same amount of money.
I am actually going to give you a fourth way to grow the business, or to increase profits I should say, and I am going to give you this one first.
Bonus: Reduce Expenses
Everyone can reduce their expenses somewhere, often by 10% or more. Go and look at your expenses and see where they can be reduced. Now I am not necessarily talking about getting rid of a staff member here. People are what drive the business, and they should be generating way more than they cost you. But check out a few ideas…
- Rent – can this be negotiated?
- Memberships to programmes/softwares that you don’t use? I have been a sucker for this one in the past, just call them already and cancel the direct debit.
- Phone – are you on the best deal?
- Suppliers – when was the last time you reviewed to see if you can get better deals?
- Printing costs – these are often huge, and we have never looked elsewhere or compared to other printers.
Just go through your monthly statements and just see, what is 100% necessary for the business. Does that expense equal growth in the business. If it doesnt, get rid of it.
Now lets move on to the more fun stuff, the money generating things. There are as promised, 3 things you can do to grow your business.
- Increase the average transaction value
- Increase the number of customers
- Increase the frequency of repurchase from each customer
A small company selling a widget for £100, currently has 1,000 customers and those customers come back on average twice a year. Which means that company makes £200,000.
Even just a small 10% increase in each area can result in massive changes, check it out…
Number of customers = 1100
Avg transaction size = £110
Repurchase frequency = 2.2
Total revenue = £242,000
Thats an extra £42k a year! Could you increase each of those by 10%!! You bet you could!
Let’s take it one step further.
Increase number of customers by 25% = 1250
Avg transaction size by 25% = £125
Repurchase freq by 25% = 2.5
Total Revenue = £390,625
Thats a HUGE increase! From just improving 3 aspects of the business.
Alright so you are sold on doing this, but stuck for ideas on how you can actually implement? Lets dive into each section and play with some ideas.
1. Increase the number of customers
Increasing the number of customers is often the first thing on people’s minds. They want more people buying their product. Well, a simple question, what marketing are you doing to generate more customers?
Does your marketing generate you the number of leads you need to reach your revenue goals?
Could you, with confidence, increase your marketing and generate 25% new leads and customers?
What do for marketing for your business will depend on who your target market is and where they hang out.
If you are already generating leads through marketing, would simply increasing your marketing spend in the same areas result in an increase in leads?
If you are not doing any marketing, or your marketing isnt working, then this is a whole other lesson in itself and one we can spend time on another day. But just to give you a few ideas…
Where are your target market? Don’t assume to know either.
- Online media – Social media (Facebook, Twitter, Instagram, Pinterest etc), Website, Google Adwords, Other people’s blogs
- Offline – print advertising, flyers, brochures
- Referral – do your clients refer you to friends, family, other businesses regularly?
- Public speaking
As I said, there are numerous ways to find your target market. And we can go into each area in more detail another time.
2. Increase the average transaction value
How can you do this?
- Charge more for your services. When was the last time you raised your rates? Could you increase your rates by 10%? Most people would immediately answer NO. But thats because of their own fear that people won’t pay for it, when in actual fact, if you provide value, and your product adds value to peoples lives, if it helps them, then you can always raise the rates.
- if you dont want to just simply raise the rates, then raise the rates but add on some value adders. For example, the personal trainer who raises their rates but brings in nutrition programmes for their clients. The nail salon who raise their rates but add on a “How to look after your nails at home guide”. There are many ways you can add value to what you do without increasing your time with the client.
- Offer upsells – what is your “Would you like fries with that?” You know McDonalds make about 10 cents when they sell a burger, but when they ask that question and who say yes to the fries and the large coke, their profits soar!
What is your upsell? What can you offer to clients at time of purchase? What can you offer that would enhance their experience of your product? For example, the hairdresser who offers specific shampoo and conditioner. The software company that offers ongoing monthly support with their product.
3. Increase the frequency of repurchase from each customer
Would your customers benefit if they used your product more? if so then give them the opportunity to purchase it more often.
- Monthly direct debit for services, or delivery of the product each month – this makes sure that they use it and get the biggest benefit out of it. yes they buy more from you, but as a result they get the desired benefit. There are so many businesses that can do this in some way, yes that means you to.
- If your items are purchased “irregularly”, then make it an automatic payment based on when you know the widget will run out. No company wants to run out of printer ink, you can add serious value just by making sure that when the ink runs out, magically the delivery has appear and no one has had to do anything.
- Internal marketing – how do you market to your list of customers and prospects? People who have already either bought or said they are interested in your product? Are you giving them useful information regularly? Are you giving them the opportunity to buy? If you are a store selling toys, are you helping the parents keep up to date with which toys are best for their kids? If so you can bet that those parents are coming to you to buy all their presents and they will tell all their parent friends about you too.
- If you sell items that are only a one time purchase and you only sell one item, then look at this as how many referrals do you generate from each customer? How are you creating raving fans that talk about you to everyone?
So there you have it, the 3 ways to grow your business. I would take time and focu on each one and work out how you can grow each area of your business. then most importantly go implement!
These ideas that I have talked about here are from a phenomenal guy called Jay Abraham. make sure you grab his book Getting Everything You Can Out Of All You Have Got. get it now on Amazon, just click here.
I am going to challenge you to do this →
Leave your comments below with ideas of what you can do to increase each area of your business. i would love to hear how you are going to grow each area of your business, and let’s brainstorm together.