Several recent surveys show that business owners expect the revenue of their business to improve over the next year. And another 60% also believe the current economic climate is having a positive impact on their business. This is all good news—especially for the business owner who is always thinking about how to increase their earnings and grow the business even more. When times are tough, every little bit of growth and revenue helps. And when business is relatively steady, a healthy bottom line can enable you to build up an emergency fund, grow and expand your business.
But what is the key to sustaining growth in any economic climate? Implementing any one of these strategies can be the fuel for future growth:
Optimize your pricing: Setting the price for your products or services will drive revenues and just importantly the gross margins for the business. Constantly revisit your pricing formulas and see how your pricing compares to the competition. Optimizing your pricing to balance value with profit can have a huge effect on your company’s success and profitability.
Improve your working capital: Working capital is defined as the amount by which a company’s current assets exceed its current liabilities. Some of the ways that working capital can be increased include: issuing common or preferred stock for cash, borrowing money on a long-term basis, replacing short-term debt with long-term debt, or selling long-term assets for cash. If a company can better manage its inventory and its accounts receivable, the company’s cash and liquidity will increase. This in turn improves the company’s working capital and will put you in a position to have the funds to grow, expand and take on a major client which may entail augmenting your workforce and infrastructure.
Focus on your core competencies: Focus on what your business is known for and what you do well. On many occasions when it is desired to grow, a company strays from its core competency and involves itself in a business industry it doesn’t know very well. Sadly, many ventures begin to drain time and resources and cash from the main business. By sticking to your core competency, you will find the most profitability and enduring growth opportunities.
Market Expansion or Development: A market expansion growth strategy entails selling current products in a new market. There are several reasons why a company may consider a market expansion strategy. First, the competition may be such that there is no room for growth within the current market. If a business does not find new markets for its products, it cannot increase sales or profits.
Acquisition of Other Companies: Growth strategies in business can also include an acquisition. The objective of growth through acquisition strategy is to gain market share, acquire a greater resource and ensure business expansion. In an acquisition, a company purchases another company to expand its operations. An acquisition growth strategy can be risky if you do not have experts in M&A and business transitions on your side to analyze the deal and guide you throughout the transaction.
Follow the 80/20 Rule: With the right data analytics and financial reporting in place, you can easily figure out the 80/20 rule to determine which are your most valuable customers and/or products. For example, if a customer is not one of the 20 percent who bring in 80 percent of your revenue, then you’re probably safe de-emphasizing them and focusing on others. Further, if those same customers happen to be part of the 20 percent of your customers that take up 80 percent of your time, then letting go of them will probably free up your time and resources to focus on more profitable, growth-oriented tasks. Focusing on your most profitable customers and products will help you quickly increase profits.
Focus your marketing efforts: Make sure your marketing is targeted to the right prospects, with the right message, at the right time. Do some research, think about who is most likely to benefit from your product or service, and then consider how to reach out to that group of people. What message would most appeal to them? Would they respond best to emails, mobile messaging, magazine ads?
Utilize the power of a mentor or business advisor: It’s lonely running a business. Sometimes you don’t have all the answers and you need someone with years of experience in specific areas to help you make data-backed, experienced decisions.
B2B CFOs are passionate about helping business owners. Each Partner averages 25+ years of experience as CFOs and strategic financial business advisors. We improve the lives of business owners by understanding their goals and removing barriers to business growth.
If you desire to grow your business even more in 2020, contact B2B CFO® to discuss your opportunities.