For the vast majority of businesses the first year or so of operation are all about survival. During this period you find out if there’s a market for your service or product, you establish a customer base and you build the infrastructure – be it real world or digital – on which your business will depend. During this period, issues such as maintaining cash flow and turning initial investment into net profit will dominate your thinking, but if a business becomes established, then the question of business expansion should be addressed.
How to expand your small business
Expanding your business means building upon your initial success and taking steps to turn a business from one which is simply surviving into one which is thriving and growing. The precise means of delivering business expansion will differ from business to business, but there are proven business growth strategies which can be tailored and instigated across the board:
Gaining new customers may seem like the most obvious way to grow a business, but it isn’t the only method, or the simplest. For many businesses, existing customers represent an under-utilised asset. If you can turn an occasional or even one-off customer into someone who spends with you on a regular basis, your business will grow. Making the most of existing customers in this way can be done through gathering data on each customer and using that data to target marketing aimed at appealing to their known preferences. The best business growth strategies are those which combine attracting new customers with embedding the existing customer base.
One method which enables you to attract new customers using the resource of your existing customers is that of referrals. This simply means asking current customers to refer you to someone else they think would be interested in your product or service. You can incentivise current customers to make referrals of this kind through offers such as a discount code for every new customer you attract via their referral.
Although business expansion is usually framed through the delivery of business growth, it can also be delivered by the simple expedient of cutting the costs of running a business. If you gather more customers, for example, but increase costs at the same time, then the net profit margin of the business won’t rise despite more sales being made. There are several approaches which you can take to cutting costs across a business while trying to grow that business, and these include:
Putting an end to the provision of low-earning products or services
Improving your marketing and sales effort in a way which boosts inventory turnover
Cutting overheads via a thorough audit of the money being spent across the business
It should be noted that any cost-cutting needs to be done in a manner which doesn’t impact on customer satisfaction or staff morale, as both are vital for the long term success of your business.
Expand your market
You can expand the market reached by your business through a number of steps. The simplest of these is simply to start selling via new locations, and in the digital age these locations could be either a bricks and mortar store or a new online presence. You can also expand by researching and marketing new uses for the goods or services which you provide.
We can help
If you’re interested in finding out more about transforming your small business into a big business, or any other aspect of your business finances, then get in touch with our financial experts at GoCardless. Find out how GoCardless can help you with ad hoc payments or recurring payments.