While there may be thousands of ways to improve your business overall, there are only a handful of ways to really grow the income of your business. Five come to mind quite quickly.
- Increase the number of customers you have.
- Increase the revenue from existing customers.
- Increase the profit margin on your goods or services by raising prices.
- Increase the efficiency of your business processes (reduce cost).
- Increase the number of products or services you offer.
Each one has pros and cons attached to it and some may be impossible in certain circumstances. What you have to decide is where you want to focus your attention right now in order to give your business the income boost you want.
Getting more customers is the first thing that always occurs to business owners looking to increase their income. After all, if you bring more people through the door, you’re almost always bound to sell more, right?
While that may be the case, you have to take into account the cost of acquisition for each of those new customers. If you spend $1000 to run an ad in the local paper and it brings in 10 new customers, the cost of acquisition for each of them is $100. If they each buy more than $100 worth of what your selling, you at least break even. If they don’t, you’ve actually lost money by bringing more people through the door.
Getting more customers is often the most costly and difficult thing a business can do to get more money. Yes, it’s necessary at some point or another, but it should always be done with a shrewd eye to the bottom line. Always look for the cheapest, most effective way to bring new people in–and once they’re in, be sure they have a fantastic experience, whether they buy anything or not!
More Revenue from Existing Customers
If your business is running okay, chances are you have a steady stream of customers. The question to ask yourself is: Are you giving them every chance possible for them to give you their money?
Online stores like Amazon have this down to a science. Every time a customer makes a purchase, they’re immediately shown a bunch of other stuff they may be interested in. Do you know your customers well enough to know what else they may be interested in? Is your staff trained well enough and knowledgeable enough to be able to suggest other products or services that may help your customers accomplish their goals?
Say you run a hardware store and someone comes in to buy some copper pipe. How many other items may they need to complete a project that involves copper pipe? Soldering tools? Hacksaws? Gloves? Maybe a new sink fixture? Or, perhaps, new carpet to replace what was ruined when that old water pipe broke the night before?
Many business owners–especially those in service industries–are loathe to raise their prices. They worry that they’ll scare away existing customers or have trouble bringing in new ones. Sure, you can increase your profit margin on a per-sale basis, but is it worth risking losing customers to do it?
In many cases, yes, it is.
The reality of it is that people are willing to pay for good products or services. As long as you deliver what you promise (and a little bit more), they’ll remain happy and not have a problem handing over your increased fee. There are upper limits to what any given market can bear, but chances are, if you’re looking to grow, you haven’t reached that limit yet.
Always be on the lookout for ways to improve the efficiency of your business processes. Cutting 15 minutes a day off of a task you perform gives you more than an “extra” hour of time for other things by the end of the week.
Sometimes technology is the answer. Long ago, when I worked at a newspaper, we cut hours off of our production schedule by moving to all-digital production. That freed up a lot of person-hours and saved a good chunk of change. If you run a retail business, see what you can do to reduce the time it takes to manage your inventory. For a service business, see what you can put in place to make managing clients go more quickly.
Whatever you do, don’t cut costs to the point where it has a negative impact on the quality of what you provide your customers. Shoddy work and crappy service will cost you much more than you’ll ever save. Even worse, the hit your reputation takes could spell the end of your business.
Be on the lookout for other goods or services your clients want, specifically, stuff that you don’t offer. If it’s something easy to add, like another product line or an additional service, add it to your business and reap the rewards of more income and happier customers.
Even better, take a look at what you already have and see if you can offer it differently or to a different target market.
If you’re a veterinarian, think about creating a couple of small books (either physical or electronic) focusing on ways to keep different types of pets healthy. You can sell those on the side or give them to customers for free (which will build good will and help encourage them to spread good things about you, bringing in new customers at no real cost to you). Chances are, you have a ton of knowledge and experience that you can package and deliver in numerous ways. Don’t be afraid to take advantage of that.
The best thing about packaging (or re-packaging) information and knowledge you already have is that you only have to put it together once–after the first round of creation, it’s all profit.
Most Importantly, Listen and Talk
If you’re looking to expand your business or increase your income, the best things you can do is listen to the customers you already have. They’ll let you know what they want and what they’re willing to pay for it.
The second best thing you can do is talk to your customers. Tell them you’re looking to do something a little different or that you’re looking to bring in a little more business. If you’ve been treating them well, they’ll be more than happy to offer up whatever they can to help you out.
How do you want your business to grow in the next three months?Schedule a Free Presence Session to figure it out