After the initial pains of a business start-up, sales growth, at least in percentage terms, can come fairly easily. That’s because the starting point is usually so low. Second year sales of $200,000, as just one example, would represent a 400% improvement over year-one sales of $50,000.
Repeat customers, referrals, and results from marketing and advertising programs can help a new company get out of the gate quickly. That’s a great feeling. But at some point, after a certain number of quarters or years, you will have run through the “low-hanging fruit” on your prospect list, the easy sales have been made, and the law of diminishing returns – regarding your marketing efforts – starts to kick-in. This is where a more normal growth rate, in terms of your particular industry and general economic conditions, sets in.
Don’t worry. No one grows at a 400% clip every year.
On the other hand, who wants to have their business tied to a “normal” growth rate?
Business Growth Strategy #1: Sell More
Of course. But, specifically, this refers to selling more of your current offerings to your present customer base (see MP Star’s post on Your Company’s Most Powerful Tool), or finding additional customers that will buy your products.
· Current customers. Take a hard look at your customer list and rank your accounts by revenue. Interestingly, many marketing experts say the top 20% (your “star” customers) are often already generating most of what you’re likely to receive from them. The real potential, they say, is in the second tier, or second 20%. These accounts, properly serviced, have the potential to become “stars.” Work with your sales team to create a specific plan for targeting your second-tier accounts.
Brainstorm. What needs do they likely have that your products or services can meet? Are there other divisions, offices, or territories where you can ask your current contacts to make an introduction? Do these accounts have enough in common to justify a product or service modification, a dedicated catalog, or special pricing?
· New customers. You can acquire new customers by selling to buyers new to the marketplace, or by luring them away from their current suppliers. When most companies put together their annual marketing plans, they tend to focus on new customer acquisition. No problem, there. But if possible, be specific about who you’re targeting, and focus on presenting your company’s strengths when you’re making your pitch. (That is, are you competing on price, quality, experience, or some other attribute?)
When implementing actual tactics for adding customers – adding sales staff, ramping-up trade show participation, opening a sales office in a new territory, etc. – make sure you give your efforts enough support and time to succeed.
And whether you’re trying to penetrate current accounts more thoroughly, or bring new customers into the fold, make sure your sales materials are up to par, to give your team a better chance of succeeding.
Business Growth Strategy #2: Diversify
When you extend your product or service lines, you benefit in two ways, one, by potentially having something new to sell to your current customer base, and two, by bringing in new accounts that may not have needed your original services.
Talk to your sales team. Are there opportunities they believe are being missed because they can’t meet a particular customer need?
But before you take the leap, make sure you can count on a reasonable payback period relative to any investments you have to make. That not only includes new staff, equipment, materials, and promotional costs, but also the time you and other key staff must spend on the new effort. In the excitement of a new launch, it’s easy to overlook what helped you succeed in the first place.
Tip: Look for synergies, or logical fits that complement what you’re doing already. For example, janitorial service companies have extended their offerings to exterior power-washing, interior and exterior painting, and even landscaping. Retail-type businesses can offer virtually any product or service that meets the needs of their typical customer.
Business Growth Strategy #3: Acquire
Buying-out a competitor is a fast-track approach to sales growth. A smart acquisition can bring an established customer list, differentiated products, brand recognition, and talented staff . You’re also sending a message to the marketplace that you plan on being around for a while, and that you intend to compete aggressively.
Of course, the projected revenue must make the investment in the acquired company worthwhile. Work with your finance manager to make revenue estimates that are likely from the acquisition, and be conservative!
Tip: You don’t have to buy the entire company! Sometimes, acquiring a particular brand name, product, patent, or even a protected sales territory can make a big difference for your business. And these types of deals can be a “win-win” for both companies, if the seller isn’t leveraging the property effectively.
Discover more creative methods of business growth at MP Star Financial:
- Creative Ways to Grow Your Business: SWOT Analysis
- Creative Ways to Grow Your Business: Time Management Strategies
- Creative Ways to Grow Your Business: Make Yourself an Expert
- Creative Ways to Grow Your Business: Tapping Your Company’s Idle Assets
- Creative Ways to Grow Your Business: Online Advertising
- Creative Ways to Grow Your Business: Job Sharing
Are cash flow management problems keeping your company from growing? Let MP Star Financial help. Call for more information. (800) 833-3765, extension 150.
Photo courtesy Joe DeShon