Your small business has been thriving, and the pipeline is always filled with upcoming work. For the first time since leaping into the world of small-business ownership, you finally have a sense of job security.
But don't get comfortable too soon. Jacob Aldridge, a licensed Shirlaws business coach, says this state of bliss ultimately comes to an end for most businesses. “They experience a successful period of uncontrolled growth," Aldridge says, "but then find themselves in a no-man's-land situation where they're at capacity but not profitable.”
If your business seems to have all the work it can handle but you aren't bringing in the money you need or expected, it’s time to take a serious look at how you’re going to realistically to scale your business without working 24/7 and losing your sanity. It’s time for you to think strategically about getting the most out of your existing resources. The following six tactics will help:
1. Increase your rates or revamp your packaging. Is it time to raise your prices? If you’re staring down a jam-packed pipeline, Aldridge says businesses can usually increase their prices by 10 percent or more with a direct benefit to the bottom line. Even if a few customers leave, the subsequent revenue growth is typically worth it. If that doesn’t feel comfortable, Aldridge suggests re-packaging the way you’re selling your products or services. This can increase customers' value perception of your business, so you’re less likely to experience push-back from customers for raising rates.
2. Trade value for money, not time. Think about ways you can offer more value that won’t cost you more time. Creating a self-study course, for instance, that teaches your target audience how to handle some of what you do themselves is a single-time investment that generates money repeatedly with little additional effort.
3. Get your name out there. If you have a business-to-consumer business, think about PR strategies that will help get your name out there in the community. For instance, what about sponsoring a youth sports team by becoming the official provider of their uniforms or some other relevant product? Business-to-business companies can shift from a one-to-one format to a one-to-many format through hosting industry conferences or creating associations and networks that offer member discounts or access to relevant opportunities.
4. Expand your team without hiring. Ian Aronovich, co-founder and CEO of GovernmentAuctions.org, suggests adding to your sales team on a commission-only basis. The right salesperson can excel in such a role, and you don’t have to pay anything until they've landed a sale. That means you don't have to worry about whether you’ll make payroll. Affiliate marketing is another twist on this approach. Aronovich says it’s an often-overlooked tactic, but it can work for many types of businesses to help them increase sales without taking on a big financial risk.
5. Edit your client base. “Especially post-recession, your business is likely servicing a number of clients who aren't profitable and aren't a great fit for you—they are too small, the wrong industry or just don't respect you,” Aldridge says. There comes a time when you need to let go of customers who aren’t working for your business. In doing so, you and your staff will be able to spend more time with your best-fit and most-profitable clients, which is better for everybody.
6. Offer new products or find new customer bases. Offering a new product or serving a new industry is a way to increase profits without necessarily adding to your team or resource pool. Aldridge notes that second products are almost always more profitable than the first. “The profit margin is created because you understand your target market, and you can sell the new product to an existing customer base.” A similar avenue often works for businesses that sell information or intangible resources: Often, some slight changes to help you refocus products and services can expand your potential customer base to a whole new industry. If it’s a product that generates recurring revenue, that's even better.
Every small-business owner has heard a story (or two) about the entrepreneur who works like a dog, day and night, to get his business past the inevitable growth plateau. It sounds hard, and it's certainly not something any small-business owner wants to experience first-hand.
With strategic plans that facilitate growth without stifling profit margins, you can breeze through the growth plateau storm and emerge with healthy revenue, happy staff and time to actually live your life.
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