Every entrepreneur wants to earn more from his or her business. When you ask business owners how they plan to meet that goal, they usually talk about making their marketing better or doing more of it. But in fact, there are many ways to go about growing a business. Here are five of the best strategies for any business to consider:
1. Find a bigger market. What needs does your business fill for your customers? Can you identify another group of people with those same needs? If you can, there is a brand new market just waiting to find out about your business.
Here’s an example: a child care center started out by aiming their advertising at parents. The center was doing well, but their marketing costs were high. Then they learned that many companies wanted to provide child care for employees, but couldn’t afford to open their own center. By contracting directly with these companies to care for their employees’ children, the center was quickly filled to capacity, and dramatically decreased its marketing costs.
2. Find a richer market. If you find yourself struggling to sell to people who often can’t afford you, look for another market that can pay what you need to charge. Many companies that do business with non-profits discover that they also need to have a few corporate customers, in order to compensate for the lower prices non-profits frequently require.
The same is true when you work with individuals. If the group you most love to serve is in a low income bracket, spend some of your time marketing to a higher income group as well. And if you can charge higher fees to the group who can afford it, do so.
3. Build a back end. It costs less and takes less time to sell something new to the customers you already have. If you’re not sure what this might be, try asking your customers what else you can do for them. An acupuncturist, for example, could also sell nutritional products.
Consultants often find that clients have many other needs, once they begin working on a project. If a client needs something that you can’t provide yourself, consider subcontracting the business to someone else and taking a percentage, or collecting a fee for making a referral.
4. Change your pricing. Any marketing expert will tell you that pricing is magic, not science. When you lower prices, sales usually go up. When you raise them, costs usually go down. The “perfect” price is the one that makes you the most money, but how do you find it?
The place to start is by doing some modeling. Estimate the size of your average sale, then estimate what each sale costs you. (A good book on writing a business plan can help.) Then, play with the numbers: see what happens to your profit as you raise or lower your price and estimate how your sales volume might go up or down.
When you model, you’re just guessing, of course, but many entrepreneurs are surprised to see that lowering their prices can sometimes bring more profit. Or by combining a price increase with idea #2 above, you could potentially make more money from fewer sales.
5. Find a strategic partner. Is there a company out there who you could partner with to gain access to their market? Imagine what your earnings would be like if Dell or Gateway included your product or service as part of the package with every computer they sold.
Take a look at the leaders in your marketplace and see if there isn’t someone whose product or service is a natural companion to yours. Partnering works with small companies, too. A chiropractor and a massage therapist can share space and exchange clients. A professional organizer and a computer consultant can team up to help clients organize information.
Be creative in thinking about growth. If you run out of ideas, remember — ask your customers! They know better than anyone what else your business could be doing to serve them.