In the quiet moments business leaders often wonder what the catalyst for business growth is. More simply, they might be wondering “what is holding me back from taking my company to the next level?” In order to find a solution it helps to know where the problem originated. Typically there are three main areas where entrepreneurs are challenged.
1. If revenue is a not increasing at the desired rate then the marketing plan needs to be revised.
Regardless of whether you are selling a product or service there are only three ways to increase revenue:
- Increase the quantity of sales from new customers (market share).
- Increase the quantity of sales from existing customers (upselling).
- Increase the quantity of products or services (diversification).
Upselling is the easiest to achieve because you have already established trust with your clients. It does involve training however it does not need to be complicated or expensive. It can be as easy as teaching your employees to say “Would you like fries with that?”.
Market share can be increased by widening your service area from locally to state wide, national or international. That may be easier than competing locally in a crowded landscape.
If you want to know how to diversify the company products or services ask your customers. You will be amazed what they will tell you if asked in the right manner. Often the best suggestions will come from your loyal customers.
2. If your lead conversion rate is less than stellar- then the sales process needs to be evaluated.
Looking at metrics such as conversion rates (converting prospects to clients) and comparing that to industry norms is a good place to start. There are different techniques and sales cycles depending on what you are selling. The sales process for inexpensive items will not be effective for major purchases and will require a longer sales cycle. How you follow up with prospects will also vary depending on what you are selling. Then of course there is the effectiveness of the message. Smaller purchases are often emotional impulse buys. Larger purchases need to solve a problem or create a specific benefit to the customer.
3. If revenue is increasing but profit is not- then your operations needs to be evaluated for efficiency, streamlining and profit leaks.
There are many variables to be evaluated. It starts with a review of the financials to identify trends. Then the organizational chart needs to be looked at from a stand point of process flow and bottlenecks. Culture and employee job satisfaction come into play because it affects productivity. Policies and procedures only help when they are being consistently utilized. An anonymous employee survey asking for improvement suggestions may be an eye opener.
That’s the obvious part. What is not as obvious is that most problems start at the top and trickle down. Unfortunately many business owners do not have the benefit of an MBA or business school training. Therefore their education comes in the form of trial and error in the School of Hard Knocks. Often times entrepreneurs look for solutions in all the wrong places. Try asking yourself some of these questions:
- What is your vision for the company? Do your employees know what it is?
- What percentage of your work week is spent working on the business vs. in the business?
- How are you monitoring the effectiveness of your marketing plan? What is the ROI?
- What are the career goals of your employees? Are they in line with the company goals or are they just there for a paycheck?
- How do you define success? What are the metrics? Customer loyalty, employee turnover, or revenue?
- What is the single greatest benefit you bring to your customers?
- What do you do differently than your competition? How is that articulated in your marketing?
- What are the hot buttons of your prospects that lead to buying decisions?
- Do you know psychographic characteristics of your target market? That includes interests, values, lifestyles, opinions, and attitudes. These factors influence buying decisions.
Finding the solution to increasing revenues and profit is often not a single event. It is a process. If you identified some areas in need of improvement seek out best practices from your industry association, brainstorm with another business owner who is not a competitor, find a mentor or locate a business consultant to help you. Start with one improvement, evaluate the results and modify as necessary. Change is an ongoing process. The important thing is that you are making progress towards your goals.