Business growth isn’t complicated. In fact, it is dead simple. (Not easy, but simple.) If you want to grow your business, you have to do one of the following three things. Every growth strategy in the world is a variation on one of these ideas.
Strategy 1: Get More Customers
I know what you’re thinking. “THANKS FOR THE TIP, KATIE. I’LL GET RIGHT ON THAT.”
Before you hurl the expensive electronic device you are using to read this, let me say that I know you already know this one. There are a couple of reasons I am mentioning it anyway. First, sometimes we know that we need more customers, but we aren’t specific enough about how many more we need. Lack of specificity leads to lack of focus, and an unfocused business owner is often an ineffective one.
I want you to get specific, even formulaic about how many more customers you need to get to that next level of growth. For example, if you need to increase your monthly revenue by $5,000, and your customers spend $50 a month with you, then you need 100 more customers. If your customers spend $1,000 per month with you, then you need five. This kind of specificity will go a long way to inform the marketing tactics you need to use in order to acquire new customers.
The second reason for mentioning this completely obvious business growth strategy is this: some of you are stuck thinking that this is the ONLY option for growing your business. It’s not.
Strategy 2: Sell More Things to Your Existing Customers
After my freshman year of college I got a job as a waitress at Saltgrass Steakhouse in my hometown. I had to wear Wranglers and a bolo tie and serve an appetizer called Range Rattlers. It was just as humiliating as it sounds.
Humiliation aside, there were some valuable life lessons that I learned that summer, including the concept of up-selling. There’s no one more valuable to a restaurant manager than a waiter who can sell cocktails and chocolate cake at lunchtime on a Wednesday.
Up-selling exists in almost every industry, from the magazines at the grocery store checkout counter to the BOGO sales at the Gap. However, in my experience working with small business owners, this idea often overlooked as a viable growth strategy.
You have worked hard to get the customers that you have. They are already sitting at your table and listening to what you have to say. How can you create additional products or services that will help you maximize their lifetime value to your business?
Strategy 3: Raise Your Prices
We’ve gone from the obvious (getting more customers), to the neglected (up-selling your existing customers), and now to the most hated of them all. The last way you can grow your business is by raising your prices.
But Katie, what if I lose customers? Here’s the thing: you might. But, there are a few reasons it might be ok, and even healthy, for you to lose customers. First, the customers that were ideal for your business two years ago may not be ideal for your business today. Some healthy turnover may be necessary for you to keep moving forward. Second, if you raise prices by 10 percent and lose 10 percent of your customers, you still win. You earn the same amount of money (roughly speaking - stand down math nerds) but you do less work. Furthermore, every customer you add in the future will be worth more to you than the ones that you lost.
Raising prices can be awkward, especially if you are in a relationship-based business. Also, it may not be an option for you to raise prices outright if the market for your product or service is well-established. If this is the case for you, consider ways that you can raise prices in a more indirect, roundabout way. Some examples of raising your prices indirectly include:
Setting a contract or retainer minimum
Requiring longer or subscription-based commitments in order for customers to keep their current pricing
Streamlining your offerings to eliminate low price options
Developing a new pricing or payment structure, such as fixed-fee (instead of hourly) for service providers
What’s Next for Your Business?
Growing a business, when you are in the thick of it, can seem complicated and unclear. It probably won’t be easy, but it can be simple.
About the Author
Katie Wussow is a consultant and coach who works with creative entrepreneurs to take their businesses to the next level. She lives in Washington D.C. with her husband and two daughters. She blogs about entrepreneurship at katiewussow.com/blog.