One thing I know is true: most small business owners have grown their business from lessons learned in the School of Hard Knocks, and not a textbook. Want proof? 77% of small business owners don’t have a business degree, which means they are not likely thinking about theories, elaborate processes, formulas or strategies taught in business schools to grow their business.
But planning for growth doesn’t take a business degree, these days anyway. There’s a plethora of really great ideas at our fingertips from bestsellers, to blogs, to podcasts and news articles.
Here are three growth strategies we find pretty fascinating and will help in promoting many local businesses:
Figure out your headroom.
A recent HBR.org podcast, Growth is Not Rocket Science, shared an interesting way to plan realistic yet aggressive growth. First, you must know which kind of growth is most attainable – inorganic or organic. Inorganic growth is when you grow through an acquisition, (or say, winning the $10,000 prize in our Dough to Grow Award).
Organic growth is the kind most of us experience. It’s achieved by tapping further into our existing customer base and expanding to new customers. To determine how much organic growth is feasible, yet not too “overreaching,” figure out the market share you don’t have less the market share you’re never going to get – and that’s what’s called your headroom. This is the area you aim for. To get there, consider what you have spend, how you’ll capture it – through marketing, people, new services/products, and so on.
Understand the most profitable areas of your business.
Practice the Five Ways Formula for business – a time-tested equation using leads, sales conversion rate, average dollar sale, average number of transactions and profit margins. Tip: To really increase profits, try raising your margins by 10%.
Figure out what’s holding you down.
Maybe it’s a product that requires too much overhead. Maybe it’s equipment that costs too much to maintain, or even a customer base that drains your time and resources. This strategy means taking a hard look at what’s holding you back from growth and shedding that weight. This approach is compared to pumpkin farming in the book, The Pumpkin Plan – farmers kill the less promising pumpkins so others can flourish.
Just like you, I’m always looking for ways to grow your business. Are there growth strategies that have worked for your business that we haven’t mentioned here? And, I’m curious, were you also surprised that nearly 77% of small business owners don’t have a business degree?
(For more information on growing your business by entering for a chance to win $10,000 from the Dough to Grow Award, visit www.DoughtoGrowAward.com).