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Planning for growth

The beginning of the year is always a time when we reflect and plan. For business owners, this generally means taking the time to look back and see what worked, what didn’t and why. It means looking at the upcoming year to project sales figures, profits, growth targets, new customers and more. 

Sales and profit growth doesn’t just happen. It comes from paying attention to all the clues around us and acting on them. There a only a handful of ways to grow. Some of the more advanced techniques include going public, licensing your product or technology and franchising your business model. We won’t cover these here. What I will discuss is improving upon your “organic” growth and growing by acquisition. 

Grow Organically

Growing from within, beating the pavement to find new customers, improving your advertising to generate more foot traffic, etc. How can you grow sales and profits? You can:

• Develop new products or services for your existing customers
• Find new customers to whom you can sell your existing products
• Sell more of your current products to your existing customers
• Develop new territories (another version of find new customers)

Guess what? All of the above involve that magic nine letter “M” word, marketing! So let’s review and cover some of the basics. Marketing starts with research. Who, what, why and all that jazz. It doesn’t matter which of the four above strategies you pick, you need to figure out the details. 

In simple terms, you will sell more to your current customers or generate new customers. Let’s start with your current customer base. Now is the time to rank your customers, A-B-C. Obviously you’re A customers love you, your service and everything about your business. If anyone is going to buy more, buy different things, etc. it’s them. And so on down the line. 

Now this is the place where, when I’m speaking, someone in retail will let me know that all their customers walk in versus having outside accounts they can track. My answer is that it’s inexcusable to not have a database of your customers, especially your regular customers. People who like your store will want to be on your list.

Do something 

If you’re in a business-to-business industry, this is where you get your salespeople to make more calls, have a sales plan, a system and regular monitoring.

I’m not going to go into detail, just that you need to take advantage of any and every opportunity to get in front of your customers. This means new product, new feature, new pricing and so on. You can use targeted advertising to pave the way or reinforce the message. 

If you are in retail, selling to the consumer, look at all your marketing and advertising. (See my February 2002 column.) There are plenty of ways to “spread the word” about your business. Some cost a lot of money, some are cheap. There’s image advertising, direct response advertising, targeted offers (to your mailing list) and in-store specials. 

The bottom line is do something. Take action and be consistent. This means consistent activity and having a consistent message. There are plenty of studies (and urban legends) about how many impressions it takes to move someone to action. Simply put, some people will buy right away and others will take hearing about you many times before they do something. 

A friend of mine, Gary recently started a new business, Darwin’s Natural Pet Products (206-324-PETS, www.darwinspet.com). He delivers, to your home, hormone, antibiotic and grain free dog food. Gary states he can deliver it cheaper than you can buy it (the same quality) in a specialty pet store.

His early research indicates that there is only one (serious) qualifying question for potential customers. It’s, “Is your dog an animal, a pet or a member of the family?” If it’s the latter, they’re a solid prospect. If it’s the first, they will never buy from him. In the middle? They could become a customer.

His primary marketing tool is giving out samples. He figures that when people realize how much their dogs love the food they’ll want more. The second marketing strategy is a half-price first month of service. This is not much different than getting a sample at the end of the aisle in the grocery store and finding out the item is on sale (although Gary gives out a two pound sample of dog food). 

My point is that doing something does not have to be spending big bucks on advertising, erecting huge signs or sending out thousands of letters (although all of these can and do work). There are many ways to reach people. Determine how to qualify people, be creative, test some strategies and record the results.

 Don’t fight your competition – buy them

This is not for everyone so I’ll just cover some basics. Think about what you could do if your sales increased 50-100% but your overhead stayed the same. If all of a sudden you were in that market (Portland, Spokane, Tacoma) you’ve dreamed about. What if you had a complementary product for your customers so they could “one-stop-shop?” 

When the stars are in line for you, that’s what acquiring a competitor can do. You’ll get: 

• A new customer base to sell your products to
• A new geographic area           
• New products that you can sell to your existing customers
• Reduce overhead as % of sales

We’re not talking about fancy terms like roll-ups and consolidations (which rarely work). We’re talking about one small business buying another. Moving operations into one facility, handling all administration from one store and having one salesperson sell a wider range for products on the same sales call.

It’s January and if you don’t think about these things now you they won’t happen this year. Now’s the time to get out the pad of paper, find some quiet time and outline what you’d like to do this year. Start simple, see what makes sense (so you still have a life), break it down into small, manageable pieces and start at it.

© Copyright John Martinka 2004. All rights reserved.