Scale is the Holy Grail.
Scaling a business can be exhausting.
You’re busy trying to drive day to day sales and make your mark as an industry expert. It’s always important to keep in mind what the end goal is.
Benjamin Franklin said, “Without continual growth and progress, such words as improvement, achievement, and success have no meaning.” While you’re working on today, you need to look towards tomorrow. There are tools and growth strategies to grow your business with little expense that you should take advantage of now.
There’s a difference between running a business and growing a business. The distinction is important because one is actually a subset of the other. Running a business is a smaller job than growing a business.
We’re going to talk about both in this post because if you’re going to run your business and not worry about a growth strategy, it might as well be a cash cow business.
And if you’re going to execute a growth strategy, you’re going to need cash to do it. In both cases, cash is king, queen, prince, and joker.
Ideas for Turning Your Business into a Cash Cow
1. Get out of shrinking markets now! This one is simple. You’re not going to maintain positive cash flow for very long in a shrinking market. And one sure way to kill a business is to gain an increasingly larger share of a shrinking market.
Think back to Blockbuster Video. They saw the video tape rental market dying because they had a chance to buy Netflix. AOL forecast the death of video tape rental when they acquired Time Warner with the idea that they could stream the vast media library they were buying.
Industry changes do happen fast, but not really overnight. Don’t be an ostrich when you see it coming. Take action to change your business.
Getting out of shrinking markets will improve your cash flow.
2. Fire or renegotiate your position with your unprofitable, or barely profitable, clients. Your profitable clients are subsidizing your losers. The money you’re spending to keep losing clients or marginally profitable clients is money you could be putting in your pocket or towards other growth strategies.
It’s not enough that your bottom line profit is good, every client should be pulling their fair share. If they aren’t, then what you are effectively doing is trading dollars from one client to another. Without profit, you’re not growing your business.
Make sure you’re applying costs correctly to each project, product line, and client to see which ones are either losers or marginally profitable. Do this each year, and then develop a plan to fix any issues you find. Keep your notes from each year’s audit, and compare your results to the prior year to make sure that you’ve held yourself accountable.
3. Sell in other areas to existing clients. Whether you’re in a growth phase or not, you need to earn every dime you can from your existing clients. How much of their wallet (spend) is available, but you’re not actively pursuing it?
Each year in your review of client profitability consider your client’s other needs. What do they want or need? If you have enough clients to make a profitable offering such as another product or service line, start selling it.
4. You don’t have to market your business as hard to existing customers. So why not have a discount program for repeat clients? Reduce their price by 1% for every year they’ve been with you up to 10% (limited by your marketing budget as a percentage of revenue). Consider doing this for orders above a certain size if at all possible so you benefit from the efficiencies.
Before you discard this idea, think about government contractors. This idea is near and dear to my heart because I had to embrace it when I built the business that I landed in the Inc 5000 three years straight. And believe me, we made a profit every year.
Government contractors aren’t allowed to invoice the government for marketing. If you weren’t allowed to invoice your clients for marketing to them, how would you adjust what you do to keep them coming back? And how would you spend the excess money?
5. Are your business hours aligned with your client’s schedule or yours? Clients need to be able to get to you. If you run a brick and mortar shop, your hours need to work for your clients.
For instance, if you ran a barber shop in a financial district, you wouldn’t want to only be open 9-5 Monday through Friday. Your clients need you before the bell rings, after the conference calls have taken place and on the weekends. Changing your hours, being open early during the week and shifting your weekend to Sunday-Monday aligns your business with your customer’s needs.
My dad built a very successful barber shop with practically no marketing budget, word of mouth advertising, great service, and being open Tuesday to Saturday.
6. Drive referrals from existing clients by offering promotions/discounts. This is a bit of a twist on offering a discount for being a long-term client. Your current clients love you or else they wouldn’t keep coming back. I’m going to assume that they would refer you to their family, friends, or professional peers.
This doesn’t have to be the classical buy 9 and the 10th one is free. Think outside the box a little. Any discount that you offer should take into account your actual marketing costs. If your marketing budget is ten percent of revenue, don’t offer a ten percent discount. Instead, try five percent and see if you get any movement. You might be surprised.
7. Rome was not built by holding meetings. Get rid of unneeded meetings and free up team members that don’t need to be in the meetings you keep.
If you find that your team doesn’t value some or all of the meetings you have, then that’s a good place to start. Ask why, and think about how you can reduce the frequency of meetings, cancel some, or completely change the format to combine two.
Meetings are to be productive, resolve issues, and not to give one person a captive audience. Get real clear about the purpose of each meeting and be dogged about protecting everyone’s time who participates.
Ideas for Scaling your Business
8. Cross-sell with a related business, or enter strategic/teaming partnerships. As an example, if you’re a dry cleaner and you work with a hotel, offer the hotel a discount when they send in large wedding parties, event planners or large local companies to you. A concierge from the hotel may know many of the big players in the area.
You may then be able to sign a deal with the big local company to do all of their dry cleaning or provide services directly to their employees. Offering this discount is like gaining a marketing teammate without having to add someone new on your payroll.
Or perhaps there’s a large contract that you’d like to go after but you don’t have all of the necessary competencies. Is there a company that has the complementary skills and technology to fill in the holes in your resume?
You could enter into a Joint Venture and form a separate company to pursue the contract. The really nice thing about doing it this way is that if you set it up correctly you can limit the downside risk to your present business as well as your partnering company.
9. Focus on scalable markets. Small markets equal small opportunities. The key to scalability is that your fixed costs stay relatively flat or grow slower than you grow your revenue. At a minimum, the revenues should be much larger than your typical product or service.
The next big element of scalable markets is that the product or service you’re providing has highly repeatable quality without an exponential effort to produce the quality. In other words, not every job, project, or client specifically needs you to be personally involved.
You don’t have to be an internet company to be scalable. Jiffy-Lube was founded out of an automotive repair shop owner’s dream to scale his business and not have to service every client himself. So he got out of doing work like rebuilding engines and transmissions and started focusing on only that part of his business that was highly repeatable and needed often: Oil Changes.
10. Automate some sales and relationship tasks with software. You can find many tools to grow your business with little expense online. The internet has a wealth of apps and software available to make your day easier which are free or well within your budget.
You can automate sales and some relationship management with software such as Infusionsoft or Aweber. Programs like these allow you to make sure that things always happen according to when you think they should. You’ll be able to keep some steps from being missed. Use Google to set up alerts which will tell you when news comes out about items related to your business.
Automating allows you and your team to focus your energy on other tasks. The computer will do the work for you. You already use apps in your personal life, they’re all over our phones, why not use them to grow your business as well!
11. Add Value to Your Clients. Think of the lifetime value of your clients. Have you stepped back and thought about the patterns in their behavior and asked, “If I was them, what would I want that would make this easier?”
Here’s the one qualification to the add value concept: spend less than $100 on any one idea. This will keep you thinking about how you serve your client. What can you do to make the experience of dealing with your company better for your clients?
This isn’t a trivial matter. I want you to draw it up on the white board in your office and keep it there for a week or two. Spend some time thinking about it.
Perhaps your clients have offered ideas on your customer surveys, but you haven’t actually taken the time to read through them.
Have your team brainstorm ideas that would add value to the lives of your clients. Give them the constraint that your company will not spend more than $100 on implementing and operating the idea. You’ll be surprised with what they come back with.
12. Educate Your Clients. Probably one of the most infuriating parts about being a client is that you don’t always understand what’s going on in, or with, the product or service that you’ve purchased. It can make you feel helpless.
You’re not the Wizard of Oz. Helping your clients understand what’s in your black box will make them feel infinitely more comfortable. Comfortable clients will buy more readily.
You can educate your clients a number of ways. It can be done during the sales process, which is preferable, or after. You can send a special liaison to them or publish several videos on YouTube. In today’s world, you simply can’t go wrong by educating your clients.
13. Build a web ecosystem to drive traffic and build reputation. Even though your customers might be used to seeing your commercials on television, for some reason if they can’t find you on the internet, you’re just not a real business. It’s not as hard as you think and you don’t have to do it all instantly, but if you’re going to have staying power and grow your business then a web ecosystem needs to be part of your growth strategy.
What’s a “web ecosystem”? It consists of multiple sites. An example would look like this: a) an authority site; b) a YouTube channel; c) a Facebook site; d) an iTunes podcast channel; and e) an Amazon channel. Depending on your industry you should consider adding or substituting in a Pinterest sight, or even Instagram. It all depends on where your client’s hang out.
If you think about, as long as you play by Google’s rules, they can’t really mess with iTunes and Amazon, and they are very interested in the continued success of YouTube.
Among the projections for Google’s next algorithm change is the word “engagement”. Creating an engaging environment where your clients can interact with you and other clients, and where they can find information in different forms to absorb is extremely important. I highly suggest that you read anything written by Gary Vaynerchuk to get more clued on this.
14. Blogging and Content Promotion. Don’t confuse blogging and content promotion with SEO. Where SEO is a little more stealthy, blogging and content promotion is a lot “in your face”. After you’ve written your amazing content and published it, you’ve got to promote it just like you promote your business so that people can find you.
On today’s internet you’ve got be found by your clients and engaged with them in many ways in order to rank in the search engine results. Engagement isn’t that hard once you get the client to notice you. The key is being found and that’s what content promotion is about.
You’ll need to put in some elbow grease to get your content picked up by influencers. You’ll need to make an effort to promote it in places like Reddit. Working on quality backlinks is sound too, as long as you make sure they are quality backlinks.
As a business owner you’ll need to know how to do this whether you’re the person doing it or not. You need to understand how it works so that you can manage the person (or contractor) doing it for you, and in the beginning so that you can do it yourself.
There is a whole world of training programs available for a reasonable fee that will allow you to invest as little as 15 minutes each day to learn how to do this. And there is a wealth of free information available on the internet that will help you get a very good start.
15. Get someone focused on your SEO. Optimize your web presence for mobile. Before, during and after you put together everything I just talked about in the previous point, you need to make sure that when your clients enter the search terms they use to describe you and what you do for them, that you come up no later than on the second page, and page one is ideal. Sixty percent of searchers never leave the first page of Google.
And because Google seems to constantly tweak their algorithm, this isn’t one of those “set it and forget it” kind of tasks. It’s a lot more like showering. And chances are, you’re busy taking care of things that you understand a lot more. So find an agency if you’re a small company, or a person if you’re a larger a company, to maintain a focus on SEO. Set a budget, however limited, and start working.
16. Evaluate your pricing strategy. Should it be Hourly, Fixed Fee, or Value pricing? Don’t lock yourself into traditional pricing approaches for your industry. Just because everyone else is doing it doesn’t mean you can’t change it up a little bit.
Hourly and Fixed fee prices are generally understood and expected. But you change this up a bit too. As an example, towing companies traditionally charge by the mile. However I have seen towing companies that charge by the hour. They take this approach because sometimes there are special considerations that need to be taken into account such as the vehicle being extremely damaged. Sometimes the mileage approach to billing just doesn’t account for problems that can only be resolved by adding time and labor.
Have you put any thought into the value that your client gets from your product or service? In the mining industry you find service providers who often price their service as a percentage of the precious metal that is recovered.
Personal Injury Attorneys often charge a contingency fee based on a percentage of what they recover for you because without them you wouldn’t do nearly as well on getting the insurance company to pay up.
This approach reduces risk for the client, and increases your potential for gain.
17. Speed up your access to your own information/data to improve your decision making. If you’re going to grow your business, you need to see what’s happening in your business now, not next month or at the end of the quarter.
If you have an internal accountant or bookkeeper, set a date each month to have the close completed and final numbers on your desk. This has to happen every month, no matter what and no matter where you are.
Reviewing your numbers has to be something where everyone in your company knows that by the 10th of each month you’ve analyzed the numbers and you’re asking questions. You should question anything that stands out. You should also praise good performances. This will help to start driving accountability for the numbers.
Dashboards are excellent way to take this concept to another level. There are internet dashboard systems that you can put to work that will make your numbers available to you in real time so you can track sales and costs as they are happening.
Business growth doesn’t happen by accident. It happens because you focus intently on it.
18. Completion Reviews. This is an incredibly valuable and easy idea and it’s a cousin to what we just talked about. One of the best ways to grow your business is to improve your execution on the business you do have.
I spent five years in a manufacturing company that did these each month on each product line and we did these on every project at HGI. Each month in our project management meetings we’d conduct a lessons learned review of all projects we’d completed that month.
In the review the Project Manager would bring the RFP, our bid (with internal data), and actual project and financial results. We would discuss the problems, how we got sidetracked, how we got back on track, and anything else we learned.
All of our Project Managers and Sales were required to attend. This allowed everyone to learn and implement immediately from a real world situation. This approach improved our execution, training, profitability, and it did wonders for our accountability.
By having the sales function present they were able to learn about the details of what happened in the field and with the data processing. This improved their knowledge and helped them to speak more confidently about how projects were managed and delivered.
Turning the microscope on your own performance can be very profitable.
19. Get good advice or a mentor when you need it. I made this one next on the list because just like having your staff perform regular reviews of their work, you should have someone who does the same with you.
Having someone who’s been there before you to talk to is incredibly valuable. When you’re the person who’s responsible for it all, you need someone to bounce ideas off of, keep you focused, work through issues you haven’t experienced yet, spot problems before they happen, and to help hold you accountable to commitments you make.
A word of caution; this person should not be a “yes” man. This has to be a person who can and will be honest with you. You don’t need a parrot, you need a true guide. For the entire time I was at the helm of HGI I had a business coach and often met with another mentor.
20. License Your Product or Service. Once you’ve got a little brand recognition licensing can be a very solid growth strategy. Many business owners worry about creating their own competitor when I bring up this idea. My response to that is that you can manage this in your licensing agreement and by setting territories.
So what are the considerations in licensing?
• Do NOT license your product or service WITHOUT using an attorney to build the agreement!
• Protect your Intellectual Property.
• Have a fully developed set of processes and procedures.
• What will you provide in return for the licensing fee? Advertising? Tech Support? Something else?
Once you’ve met with the attorney and thought through their questions and the others just above you can start to do research to find companies similar to yours in other markets and then conduct an outreach campaign.
21. Don’t be afraid of outsourcing options. This idea is the other side of the coin to licensing. Accommodating new growth until you can afford more space, people, or equipment can be a challenge. This is where you need to get creative.
If you’ve got twenty-five people working for you then you’ve probably already done this with your accounting function. In the beginning when it was just you and a couple other people you did the accounting at your kitchen table, then you hired an accountant that you met with regularly, and now you likely have the function back in-house with a full-time accountant or bookkeeper on staff.
Other parts of your business can take the same path.
Outsourcing has been a common practice for years in the manufacturing. And it doesn’t mean you have to send it to China to have it done. In the legal industry it’s common practice to outsource the activity of collecting bills and records from medical providers. The company that owns your office building outsources the janitorial work even though they may be contractually bound to provide it. Think outside the box. What activities are you doing that aren’t a core competency and that you could pay another business a reasonable fee to take on?
A word to the wise, just like with licensing you should consult an attorney about this. There are quality and delivery considerations that need to be accounted for and you need to make sure that you have the capacity to cope with failures on the part of your chosen subcontractor.
22. At some point you’ll have to hire a team to lead functional areas. This is probably one of the biggest areas of opportunity for growing a business. Business owners often delay hiring for leadership positions out of fear that it may not work out or that they may not have the ongoing revenue to support the role.
Hiring for your first leadership role can be just the thing you need to execute your growth strategy. If I could give you only three pieces of advice about this first hire they would be:
a) The first leadership role you should fill should be the one you enjoy doing the least. It will put fun back in your work and help bring ideas to your business.
b) Hire someone who is not just exactly like you. You need complementary skillsets and interests so that you’re covering more bases between the two of you and so that you’re not unintentionally micro-managing them. It will put fun back in your work and help bring ideas to your business.
c) Hire someone with similar personal core values. This will go a long way toward making sure that you’re reinforcing the company culture you’re looking to build.
23. Hire a part-time “A-Team” for your executive leadership team. If you don’t want to, or can’t afford to hire full time executive leadership there is another approach. You need the advice of an experienced Chief Financial Officer, Chief People Officer, or Chief Marketing officer.
Consider outsourcing services where you can gain access to an experienced executive for 3 or 4 hours each month at a cost of $1-2K for their expertise.
When you’re hiring and adding staff at a rate of more than one employee every few months you may need some help. Experienced recruiters will charge based on the position they fill so you only pay when you hire someone they present. Make sure they are doing a significant amount of screening for you. The idea is that you only spend your time talking to the candidates that are the best fit for your company.
For marketing you can hire a firm at a monthly rate which is close to the salary of a marketing professional who knows SEO/Facebook/PPC/Retargeting. With a monthly contract, it’s an expense you could cut quickly if you needed to.
It’ll take a seasoned CFO only a few hours each month to drill down into your financials and point out where your opportunities are. With this situation you’ll be responsible for implementation.
Don’t Struggle to grow your business.
As Ronald Reagan said, “There are no great limits to growth because there are no limits of human intelligence, imagination and wonder.” Many great businesses start in garages. With the right growth strategies to grow your business you can be great without spending every dime you make.
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