The Roman playwright Titus Maccius Plautus was the first person to use the well-known phrase “you must spend money to make money”. However, given the current economic climate and the fact that the Federation of Small Business estimates there are 4.8 million small businesses trading within the UK, taking the view of this Roman philosopher may not be the most appropriate advice. A way of making money in business without unnecessarily spending any is to diversify your income stream, which in turn may make your business less reliant on the revenue from its core products and services. Here's 3 tips for growing a small business...
Tips for Growing a Small Business
1. Incentivise to entice new customersAttracting new customers has financial repercussions; the White House Office of Consumer Affairs (US) has suggested that it could cost between six and seven times more money to acquire a new customer than retain an existing one.
Traditionally, companies have offered incentives or perks to target new customers and secure an initial purchase and these incentives can come in many forms. For example, a car dealership could offer cash rebates or a tank full of petrol as an added extra to secure a deal.
Its modern equivalent comes in the form of deal-of-the-day-type recommendation websites, voucher codes and offer services. These services often attract potential customers to a host of discounted, exclusive and non-exclusive online offers on a range of products and services. The advantage for the participating business is the exposure to a much larger customer base, which in turn may become first time purchasers.
2. Sell more to the customers you already haveA simple way of increasing business growth is by encouraging your current customers to buy more of your products or services.
Upselling is a great way to get your current customers to spend more. The term has different connotations in different industries, but generally is used to refer to suggesting a larger, higher end, more expensive or more profitable product or service. Have you ever been asked to “go large” at a fast food chain or bought a 50” TV instead of a 40” set? Both are common examples of upselling that you have perhaps experienced.
Cross-selling is another method that can boost sales with current customers. A cross-sell occurs when you suggest additional products or services from a category that is different to the product or service you are viewing. Restaurants often employ cross-selling by encouraging servers to ask those ordering main meals if they would like any side dishes with their food. Amazon is an excellent example of an online business using this tactic to increase sales. As far back as 2009, the retailer found that approximately 35 per cent of its sales could be attributed to cross-selling.
3. Harvest the value of your business propertyDoes your business premise have any space it could utilise in another way? Owned business property can become a regular source of income for those with a storage room to clear or those with a spare desk in the corner of an office. There may also be the added advantage of an additional recurring income for shared services such as electricity or the internet.
By writing down such agreements into contracted periods, businesses are able to include this in future cash flow forecasting, allowing for more careful and considered financial management. Businesses can also use intangible assets such as a licensed idea as a method of making money and growing business.
There are ultimately several more ways a small business can boost growth. However, incorporating these tips and advice can help businesses get the most benefit from the assets and customers that they already have.