Plotting the route to growth

A smart approach at five key points of your business – some of them often overlooked – can push your profits upwards.

The route to business growth seems fairly plain. You expand by winning more customers, selling more products or services, and ultimately making more profits.

But to make these things happen, you first need to drill down further and exert pressure on the factors you can actually influence, says business coach Alan Brighton.

"Most businesses would say they want more customers, sales and profits – but these are just results," he points out.

Brighton identifies five ways in which businesses can nudge growth upwards. "The key to success is to be working on a few strategies in each of these five ways – small improvements in each area will have a compound effect on your profit."

1 – Lead generation

Finding potential customers who want your products – even if they don't know it yet – is the goal of your marketing efforts. But it can be overplayed at the expense of other valuable activities.

"Most businesses get very focused on leads," says Brighton. "But this is the most expensive of the five ways to grow – it makes more sense to concentrate on the others first."

2 – Conversion rate

You've invested in showcasing your product – converting awareness into sales is, says Brighton, "a goldmine within every business as it is totally within your control".

Follow-up calls need to be made by the most highly-trained and knowledgeable salespeople. And just as important as bringing your best resources to the conversion effort is understanding why calls fail to convert.

"Have your business mystery-shopped," says Brighton. "It's amazing what you will learn, and it's a fantastic opportunity to improve performance and growth."

3 – Number of transactions

It's six times cheaper, on average, to sell to an existing customer than to a new one.

Making sure customers have a great experience is the surest way to lure them back (and encourage them to spread the word). Sales offers are effective too.

But simple, often-overlooked processes – such as automatically booking the customer's next product update or service appointment – can yield a surprising impact for little effort.

Brighton also reminds businesses to keep communicating and not to assume customer knowledge: "Do your customers know everything you sell, and do you tell them regularly?"

4 – Average transaction value

Raising prices can be an agonising decision, particularly during low inflation, but it's sometimes unavoidable.

"Business owners are often more worried about putting up their prices than the customers are," Brighton says. "Remember that people buy on value, not price. If you give good value, you can always charge more."

5 – Margins

Examining your cost base is, Brighton says, the cheapest and easiest way to promote growth – and should be tackled first. Yet when turnover is healthy, many business owners are complacent about their overheads.

Regular meetings with supply chain partners can play a part. "One of the key things you can do is work hard with your suppliers. That might mean playing hardball on prices, but not always," Brighton says.

"When you sit down with suppliers, you often find there's something they want that they haven't yet asked for, which can form the basis of a trade."
He urges business leaders to spend as much time as possible on high-value activities such as the five above.

"You typically hear from business owners that they keep getting dragged back into the low-value activities that they're paying others to do," he concludes. "You need to be working on your business, rather than in your business."

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