Most businesses are looking to grow – not all businesses, but most. There are three ways to grow your business, and the way to achieve growth is to focus only on these three things.
But first – why do you want to grow?
We suggest that you answer the following five questions first.
What business are you really in?
Think about Netflix and Blockbuster for this question – Netflix was offered to Blockbuster for $50m but was turned down. We all know what happened to Netflix and Blockbuster, but what went wrong? Blockbuster needed to understand what business they were in – entertainment.
Why am I in business?
Why did you set up your business? Are you there yet, and if not, how will you close the gap
Who am I in this business?
Am I an artist, a manager, or an entrepreneur
Where are you in the life cycle?
Think about the individual, the business, and the industry.
What is next?
So, back to the three ways to grow a business.
1) Increase the number of clients of the type you want
Identify the ideal customer and plan a lead generation and prospect management process to add to the number of customers.
2) Increase the average transaction value of your customers.
You can increase the number of services a customer takes or the price of existing services.
3) Increase the frequency of the times a customer buys from you.
Let’s see the impact of small changes to these three things. As shown below, increasing each of the three things by a small amount brings about a 33% growth. Most businesses can achieve this small change that brings about big results.
Number of Customers | Average Transaction Value [£] | Frequency of Purchases | Total [£] | |
Current Sales | 1,000 | 500 | 2 | 1,000,000 |
Increase | 10% | 10% | 10% | |
Increased Sales | 1,100 | 550 | 2.2 | 1,331,000 |
