Three Ways to Grow Your Business
Growth: we all want to grow. So if you’re reading this, I would assume you’re someone who wants to learn and grow your business. We’ve heard the clichés in business, such as “if you aren’t growing, you’re dying” and many others of a similar vein.
I worked with Marcus who had employed a business coach to help him grow his business and was provided the formula which many of us have seen before. This formula focuses on areas, such as increasing the number of transactions a client has with you, increasing the average value of those transactions, reducing direct expenses by a certain percentage, and other things that can provide a decent improvement in the quality of your business.
Marcus wasn’t disputing the importance of maximising the different areas, but he wanted to know about other ideas for business growth beyond the basics. His problem was that he had outgrown the advice which was being offered by the business coach; he already knew and was implementing those ideas on a daily basis. He wanted more!
His challenge was how to grow beyond this. What other strategies could he implement to go beyond where his business was today and become the business he wanted it to be?
In my discussion with him, I explained there are really only three ways to grow your business outside of what could be defined as “organic” growth to get the most out of what you already have.
You can either:
- Sell new products or services
- Penetrate into new markets
- Acquire new businesses.
Each choice has its own associated level of risk, but, if done properly, they can also provide a significant payoff.
Risk is an important point. With the “business coach” method of improving, it is incremental in nature; do a little bit better here, a little bit better there and you can get 10%, 15%, 20% improvement. However, to get steep growth takes a risk with, naturally, no guarantees of success.
Methods You Can Use to Grow Your Business
1. A new product or service
Relative to the other two strategies, I would say this is the “easiest” or “lowest risk” of the three methods for growth. Like all of the strategies, you have to be careful and do your homework to ensure the best chance of adding the right product or service to complement your client base and add new clients.
- Adding new product/service lines
This is the easiest starting point; you simply buy different products or add new services that do not require any particular licenses or agreements. Simply, you purchase the product and start selling it or your business adds new services to offer.
For example, if you are selling hardware, you might be selling hand tools but could expand into larger capital equipment.
- Sell a Product in a service business and a service in a product business
You might have heard the phrase: “in business, do the opposite for what you are currently doing to attempt to add as many strings to your business bow as possible”. For example, if you are running a business which sells and installs air conditioners, then it might be a good idea for you to offer repairs and service of air conditioning units as a complimentary offer.
If you are running a service business, what products could you offer? If you provide physiotherapy, are there complimentary products that you could offer your clients when you provide a consultation?
- Exclusive rights over a product or service methodology/technique
Is there a product or service in your field which you could add to your product range (lower risk) or purchase exclusive distribution of (higher risk) to sell to your client base? This applies to service businesses as well. What if you are running a dental practice? Is there is a new technique you could learn and offer to the public, which is desired by the market and harder to find (provides more revenue)?
2. New market/locations
With today’s Internet and its capabilities for e-commerce to provide either products or services, it has never been easier to expand into new markets and reach clients who, in the past, might have been geographically impossible to reach.
Aside from the Internet, there is also the “old school” version of simply offering your product or service at another or multiple locations. For example, if you are running a high-quality hairdressing salon in one part of town, it is highly unlikely (not impossible) that someone living an hour away is going to travel far to have their hair cut. But, it would be impossible to get a regular client living in another state; the internet is not going to solve that problem.
The solution is to expand into the next suburb (think of a business that needs many locations, such as fast food chains) or another state (think of a business that can have only one location a city, such as a law practice). You need to do your research. The moment you set up a new location, you are immediately looking at an investment in the $10,000’s, at the very least.
Questions you need to consider are:
- What systemised ingredients for success in the existing location can be transferred to another location?
- How competitive is the location compared to your current situation?
- How many opportunities are in the new market compared to the existing market(s)?
But the most important question you need to ask yourself is:
- How much am I willing to invest and, if I lost every dollar, would that be an outcome I could accept?
I have seen businesses be successful in entering a market by being there “informally” for a period of time by perhaps having a single staff member share a rental space and working up from there.
This is the riskiest method for growth. It is unlikely you are going to be able to purchase a significant business for less than $100,000 at a bare minimum. There are books which have been written on acquiring businesses and how to do it successfully in what is a very risky and sometimes a negative, life-changing way if done poorly.
For this reason, I won’t say too much about this except the following:
- Yes, acquisition can be a great way to grow your business.
- Acquisition can be a great way to burn everything you have ever earned financially.
- If you think an acquisition is a smart way to grow your business, get some help from trusted financial advisors.
My philosophy with any form of investment is to know the downside and be willing to lose every dollar you have invested if it doesn’t work out.
What Marcus Learned
Marcus walked away fully informed and probably a little frightened by our conversation. But the point I wanted to make was clear: If you want incremental improvement in your business, you can achieve it with little or no risk because it is, by nature, incremental. But if you want to grow your business in an aggressive and geometric way, then you have to put your money where your desire is and be willing to lose it if you aren’t prudent.
For the record, Marcus entered a new market with a skeleton staff and minimum investment and is making it work – the signs are good.