Do you want to take a guess at the only five ways to grow a business?
Go ahead. I betcha can’t get ‘em all.
The only way to make more money is to grow your business. Here I’ll walk you through the only five ways to grow your startup.
1. Become More Efficient
When you become more efficient, you decrease your costs. By decreasing your costs you increase your profits. The result? Your business grows. There are three ways to become more efficient.
- Develop better systems.
The invention of the assembly line has had a greater impact on the world than the founding of Ford, one of the biggest companies ever. That’s the value of systemizing work. If you develop better systems, you’ll become more efficient.
- Buy better equipment.
The other way to become more efficient is to invest in better equipment. Systems can only help so much if you don’t have the right tools.
- Make a just noticeable difference.
Have you gotten a 99¢ hamburger from Wendy’s lately? In order to keep the price at 99 cents, they had to make them just noticeably smaller. A lot of companies do this but you shouldn’t. It’s the first step down the slippery slope of deceiving your customers.
Emil Motycka got an $8,000 loan at 13 years old so he could buy a commercial mower for his business. Even though it took two years to pay off, he couldn’t have grown without it. Now he owns five trucks, two trailers, and about a dozen mowers.
2. Provide Higher Quality
Improve your offering so you can justify an increase in prices. Generally, only increase your prices to existing customers if you’ve upgraded your product or started offering a superior service.
- Utilize more skilled labor.
If you’re providing a service, train yourself or find someone to provide the service at a higher quality.
- Offer a better product or upgrade.
Either make your existing product better or create another product as an upgrade. This could be as simple as offering your product in a larger size.
Sometimes you can justify a the price of your service for inflation, but you’ll have to deal with backlash from your existing customers.
However, if you plan on increasing the price of your product, let all of your existing customers know beforehand. This is a good way to get a landfall of sales quickly.
One of the reasons Jacob Cass can charge $6000+ for a brand identity is because he has fine-tuned his skills by working with hundreds of clients. Plus, he’s won dozens of awards and become one of the most recognized designers in the world. Companies with big budgets will pay for that.
3. Get More Customers
Only get more customers if your business is at a point where it can handle more business.
- Boost your marketing.
Offer a referral program. Pay for advertising. Send out direct mail. Start making sales calls. Get a blog and implement a content marketing strategy. Brainstorm creative ways to get more customers and act on those ideas. To find out how to develop an online content marketing strategy, check out Click 3.
- Collaborate with complementary businesses.
Another way to get more customers is to tap into other businesses’ customers. If you’re a graphic designer, connect with a web developer. If you sell an entrepreneurship eBook, offer an affiliate program to entrepreneurship blogs.
- Start offering a synergistic product or service.
If you offer a service, the best way to get more customers is to start selling a product that’s related to your service. This will expand a previously limited customer base.
Alex Maroko started as a personal trainer. He was maxed out at $15 per hour and could only train people within his community. So he recruited a training expert to develop an athletic training program that he could sell online. He emailed the top basketball training blogs and offered an affiliate commission for them to promote it. In the first week, he made $20K. Over the first five months, he made $100K.
4. Sell More to Existing Customers
One goal with any business is to develop a recurring revenue stream. With a recurring revenue model you can acquire a customer and sell to them on a regular basis, hopefully for life.
- Offer something that customers keep needing.
Deodorant and ice cream are examples of products that customers consume immediately and need to purchase again.
- Offer complementary services or products.
A customer who needs their lawn mowed also needs their sprinklers blown out, leaves picked up, snow removed, and gardens tended. And a basketball player who purchases a training program to become quicker also needs to jump higher and shoot more accurately.
Once you have a list of customers who trust what you sell, you can sell things to them for the rest of your life.
Adam Horwitz has more than 150K email addresses from people who have either bought something or opted-in on one of his squeeze pages. He said having this list is, “pretty much like having a virtual ATM.”
Buy out smaller companies. Once you build your business with good systems and a solid customer base, you can grow strategically by acquiring other businesses.
- Acquire a service.
If you’re offering a regional service and you’re looking to expand to neighboring regions, it’s impractical to try and pick up those customers one at a time. It’s not worth the gas and travel time to service one customer. The best way to expand is to purchase a smaller company in that region so you can start with enough customers to make it worthwhile.
- Buy out a complementary product.
Or let’s say you’ve developed software to help small business owners. A bunch of your customers keep requesting an upgrade to the software that will allow additional functionality. Instead of developing it from scratch, look for another company that has developed software that you can integrate with your existing product.
When acquiring another business, start with a reasonable offer so they know you’re serious, but leave room to negotiate.
Emil Motycka runs a lawn maintenance company, a gardening company, a snow removal company, and a commercial cleaning company. Towards the end of the mowing season he looks for small mowing operations to acquire because that’s when people are looking to sell. Occasionally he’ll buy out high school lawn businesses for almost nothing because the owner is going to college.
Sell razor blades, not razors. Sell printer cartridges, not printers. Sell calling plans, not phones. For instance, let’s say you buy a $100 iPhone and a $50 per month Verizon calling plan. For the calling plan, you’re paying $600 per year and about $25K over the course of your life. The lifetime value (LTV) of a customer for Verizon is about $25K while it’s only $1-5K for Apple.
Did you think of another way to grow a business? Let me know in the comments. Or tell me how you plan to grow your business.