by: Colleen Perry
Small business growth most often occurs through the addition of new products and services. It occurs because of a conscious decision on the part of the small business owner. As we look at the impact of technology on the local business community, growth–in terms of bringing more revenue into a business–is imperative in order to keep the doors open. So, how does a business navigate the necessity to grow? Let’s take a look at some key elements to consider.
Products: Take an objective look at your product line:
- What products does your business currently sell?
- How do those products rate in terms of primary or secondary revenue streams?
- How do they rate in comparison to those of your competition?
- Are they the latest and best products available for the job they perform?
Services: Assess the services offered by your business.
- Make a list of those services. Put a checkmark beside the ones that produce a revenue stream.
- Take a look at the services that don’t produce revenue. Is there a possibility that they can be converted to a revenue stream?
- Rearrange your list in terms of priority. Which services require a lot of time to perform while eating up valuable profit?
Customers: To make wise growth decisions, you must know your customers.
- What products do they most frequently ask for? Are you supplying that product?
- What services do they most frequently ask for? Are you providing that service?
- How much money do they typically spend with you?
- Are your employees “up-selling” by asking if the customer needs additional products to go along with their purchase?
After a business owner has done a thorough assessment of where the business is in regards to products, services and customers, additional questions can be answered.
- What products are available that would complement your current offerings?
- Are there opportunities to add customer services that can create an additional revenue stream?
- What are the strengths, talents and limitations of your current pool of employees?
- Would you have to add employees if you take on additional products or services?
- Would you have to expand your facilities to accommodate the addition of products, services or employees?
- Do you have the financial resources for the proposed growth? What financing sources are available? Do you have assets for collateral?
As these questions are answered, ideas begin to take shape and possibilities emerge. With all the facts in front of you, it is easier to ascertain the level of risk involved with the new undertaking.
Every business owner has their own comfort level with risk. When assessing the risk factor, the most common question often becomes, “What’s the worse that can happen?” If failure causes a slight hiccup, the risk factor becomes negligible. However, if failure can put you out of business…well…you’ll not only want to think long and hard about the growth proposal, but explore avenues to drastically reduce the risk.
Risk is an inherent component of small business ownership. Some risks were quite minimal and require little more than a gradual integration of services. As a small business grows, so does the risk factor. However, through each phase of growth, savvy business owners do their “homework”. They pay attention to the needs of their customers and search for avenues to draw in more customers with added products and services. They explore new business trends and embrace those that have high potential for new revenue streams.
Growth is in the reach of every business. Whether that goal is to simply increase the profits of a one-man shop or to compete in a global market, the process is the same. It all comes down to assessment, planning and implementation. Risk is a big part of the equation, but, with careful planning, it can be minimized and managed.