So, you’ve finally mustered up some courage and decided to ditch that soul-crushing 5-to-9 routine in order to start your own business. Way to go!
However, before you take a leap into the murky waters of entrepreneurship, it’s essential to research your market and see who you can grow your small business.
At first, you will be able to work on your own and run your home-based service business without inventory, employees, or an office and you’ll be satisfied with the fact that you can make some money without additional costs and investments.
But, once the number loyal customer base starts growing, you’ll have to start scaling your business, and for that, you need resources and a well-thought-out strategy. Otherwise, things can easily spiral out of control and ruin your business.
1| Marketing Matters.
Small businesses struggle with their overall budget so that there’s very little room for marketing in their financial plan.
But, if you want your business to grow, you simply can’t rely on word of mouth solely. You still need to invest in promoting your products or services as that’s the only way to reach potential customers and get them interested in your offer.
There’s one big mistake that many entrepreneurs and start-up owners make and that can jeopardize their business – they cut marketing expenses. Such a practice can be particularly detrimental because when you’re going through a rough patch, you should be promoting your business at the top of your lungs, as that’s what will bring you more customers, more sales, and more profit.
The last sentence clarifies the reasoning behind the idea that you should invest in your marketing all the time.
2| Build Loyalty Customer Loyalty.
While it’s true that a regular influx of new customers means pumping fresh blood into your business, by no means does it imply that you should take your existing clients for granted.
Quite the opposite.
It’s somewhere between five and 25 times more expensive to acquire a new customer than to keep an existing one. Moreover, the odds of selling to your existing customers are 60-70%, while the probability of selling to your new prospects varies between 5-20%.
In order to get your customers to come back and stay loyal, you should:
- Make superb customer service a priority. A happy customer is a loyal customer, so make sure to provide your customers with everything they need to make the most of your product or service. This means creating an effective onboarding procedure, a comprehensive Help section, skilled and knowledgeable customer support reps, and a chatbot which will be available 24/7 to handle customer questions and issues.
- Encourage customer feedback. Not only will you allow your customers to have their say and show them that their opinion matters, but you’ll also gain valuable insights which will help you improve your product, its features, as well as your customer service.
- Offer customer loyalty programs. Incentives are an important part of customer loyalty. Free shipping, discounts, freebies, and other small tokens of your gratitude for their loyalty won’t affect your bottom line too much, but their impact on your customer loyalty will be immense, and your profit will increase.
3| Manage Your Cash Flow.
A stunning 82% of small businesses go under because of poor cash flow management, and if you want your SMB to survive, you need to make sure to maintain positive cash flow.
As it’s easier said than done, let’s discuss how to achieve this goal in practice.
- Always have at least 3-6 months of working capital as that way you’ll be prepared for unexpected situations, demands, and emergencies, such as a client who fails to pay on time or an urgent expense that needs to be covered.
- Don’t pay all your expenses on the same day. Instead of that, use software to set up automatic payments and schedule them for different dates. Paying a lump sum can be a huge blow for a small company, and that’s the reason for stretching your payments until the final day they’re due.
- Reduce your costs. There are numerous ways to cut corners without affecting your business and its stability. So, instead of purchasing, for example, paid operating systems and business software, you can use reliable open-source alternatives. Also, you can find pretty decent and affordable refurbished hardware and equipment that you can use.
However, sometimes a cash injection can come in handy and help you stay afloat and grow, which is why it’s a good idea to be in the know regarding business startup grants and support.
4| Hire Smart.
All entrepreneurs and small business owners are under the impression that they need to singlehandedly complete every task.
And that’s a big problem because they don’t distinguish between important and less important things. Prioritizing is a skill that you have to learn if you want your business to thrive. This means that you should focus only on high-value tasks and delegate or even outsource the low-value ones.
At first, you might ask your friends and family to step in occasionally and help you, but after a while, you’ll need to think about hiring employees. If you think it will be too much of a financial burden for you to hire someone full-time, you can always opt for freelancers and save on payroll taxes, healthcare, employer liability insurance, and other expenses that go with hiring full-time employers.
5| Focus On What You Do Best.
Although diversifying your offer is usually one of the main tips that you’ll get when running a business, you need to think this entire concept through. Namely, by doing this just for the sake of it and reducing the idea of diversification and change its meaning to different.
If you try to diversify your offering simply by adding different product and services, you’ll spread yourself too thin.
Instead of that, it’s much better to focus on your core competencies, that is, on what you do best and polish, upgrade, and improve your product or service.
Research your main competitors and identify what features and functionalities you can add to your product or service in order to make it better than the ones that are currently offered on the market.
As you can see,rapid growth is a double-edged sword, and it’s essential to have a detailed scaling strategy which will allow you to eliminate its possible downsides, and these five tips can set you in the right direction.
Michael Deane is one of the editors of Qeedle, a small business magazine. When not blogging (or working), he can usually be spotted on the track, doing his laps, or with his nose deep in the latest John Grisham.