1. Outline Your Budget and Sales Goals
It may seem a bit contradictory, but having a thought-out, detailed budget can be an incredibly helpful tool for boosting your business revenue. A financial planning document can help you identify upcoming cash flow issues and determine how much revenue you should bring in to support future expansion.
Furthermore, budgeting documents are necessary to receive outside financing from banks, angel investors, or elsewhere. Potential lenders will want to see why you need more cash and how that initial funding will turn into a return. Even if you aren’t seeking funding at the moment, you will want to look into how your investment of time, energy, and money will result in a profit or loss.
Once you finish your plans, you can better understand when and how your company can increase revenues. With a concrete plan, you can foresee upcoming smooth seas as well as the rougher waters. Then you can use this data to take advantage of the ideal time to take your small business to the next rung.
Financial planning is an art, a science, and, often, an emotional process for small business owners. Financial planning is not accounting—instead of looking to the past, the goal is to reasonably predict the future. The process is related to bookkeeping, though; you will use prior figures to determine your estimations.
On the most basic level, you should be looking at your expected income versus expected expenses. This comparison includes the Cost of Goods Sold (or COGS), meaning the costs related to manufacturing your goods or offering your services. When thinking about COGS, include raw material, labor, and storage costs. For a service-based business, these costs could be how much you pay yourself, an employee, or an independent contractor to complete a service. Armed with your income and COGS information, you can outline a production schedule.
You should also think about different scenarios and create different business plans based on these scenarios. Is the government thinking about increasing the minimum wage? Is the nearby college campus expanding, meaning more potential customers?
Create a plan that assumes the future factors break in your favor, a plan that assumes you will more or less maintain your current status quo, and another that looks into a worst-case scenario. Consider a range of scenarios but be reasonable when committing one to paper—it probably isn’t useful to have plans that are too apocalyptic or detail what would happen if you win the lottery.
2. Convert New Customers into Repeat Customers
One of the sagest bits of old business wisdom is that it is much more ideal to retain loyal customers than continually attempt to woo new ones. This adage was as true for medieval blacksmiths creating swords for the local castle as it is for the latest tech startup trying to boost monthly engagement.
It appears that customers are becoming even more loyal, an important point because the internet presents many of us with more buying choices than ever before. A survey published in January by the analyst firm Greenlight Digital found that 38% of customers say they are more loyal to their trusted companies compared with 2 years ago. On top of that, 46% said they show that loyalty by recommending businesses to friends and family—an illustration of how loyal customers can lead to compounded revenue.
Large firms focus intensely on keeping customers in their flock. A 2018 Forrester report found that 81% of customer experience experts say that improving customer loyalty was their top priority.
For businesses of all sizes, the most tried and true method for converting first-time customers to repeat customers is to offer an exceptional customer service experience.
Be friendly, work hard, and deal with any customer issues in an ethical, reasonable way. You should already be doing this, but it may help to view a great customer service experience as a way to increase your business’ growth as opposed to a baseline.
Beyond this, you have other options to improve your customer retention. It helps to keep your customers’ contact information and occasionally reach out—an email database and an email campaign manager like Mailchimp can be very useful.
Reach out to your neighbors and your general community—the people surrounding you will have the greatest likelihood of being repeat customers.
Other customer loyalty strategies will cost some money on your end, like coupons or discounts, but they are extremely popular approaches because they are often successful in bringing more people through your door.
3. Think about Discounts, Sales, and Coupons
Coupons, discounts, and sales can serve 2 distinct lines of attack. You can attempt to bring in a bunch of new customers by, for example, having a flash sale or a new customer discount. Or you can try to convince former customers to return by launching something like a loyalty program.
The appeal is obvious: we all love to get a deal. However, you want to consider these schemes carefully because, in the end, a discount fundamentally constricts the amount of money you can earn. You have to balance the amount of new or return business you can expect from a sale versus the money you’ll miss out on because you aren’t charging full price.
Nevertheless, a well-worn way of quickly raising revenue is to have a short sale. If necessary, these flash sales can also work well if you are trying to move inventory.
You want to think hard about how you use discounts—customers probably will wonder if something is amiss if you have constant sales. One Stanford report said that discounted prices can have unintended consequences, especially when customers see them in comparison with prices that are much higher.
“The very fact of being told to make the comparison made people much more risk-averse,” a researcher said of the study. “Marketers need to be aware that comparative selling, although it can be very powerful, is not without its risks.”
Think about buying aspirin at the drugstore – if one brand was significantly discounted compared to another, you may wonder if something was wrong.
Properly applied and marketed, though, coupons, discounts, and loyalty programs can greatly increase revenue. These approaches can convince customers to buy more than they had planned and convert first-timers into repeat customers.
4. Expand the Scope of Your Business, Even by Just a Little Bit
When you envision expanding your business, you probably think about big upgrades—hiring new teams of people, constructing a new building, or renting out a giant office.
Expansion doesn’t have to be physical. One of the best ways to increase your small business revenue is by expanding your scope. Are there other tangential services you can offer that can expand your reach to more customers?
Think about a gas station. Most people come for fuel, but station owners also quickly learned that many people could also use a snack or might want to wash their vehicle. Nowadays, even though the majority of a service station’s business is probably gas, some customers come just for the snacks or car wash.
With a retail operation, expanding in scope is relatively easy since you can just put a different product on some of your shelves. Service-based businesses can expand your scope, too, though. A plumbing company can look into offering other handyman services, and a car mechanic could start servicing motorcycles or boats.
However, by expanding your scope, you are going to need to expand your knowledge.
“There’s always been a competitive advantage in knowing more than the other guys; unfortunately, there are no shortcuts to that knowledge,” explains Kuty Shalev of the tech startup Clevertech. “There are, however, attitudes and approaches you can adopt and exemplify within your company to help you acquire that knowledge more quickly.”
Shalev recommends that small business owners maintain an inquisitive mind that is always learning. Not only do you want to expand the scope of your business, but you also want to be more knowledgeable than your competition.
Think about a guitarist. By learning bass, piano, or vocals, the guitarist can multiply the number of gigs he or she could take. Still, those other talents need to be learned, honed, and consistently maintained to be successful.
As a small business owner, you might have the freedom to hire some of this knowledge. Consider employing people with various knowledge sets in areas you want to expand into, even if you don’t have plans to do so just yet.
5. Find New Markets, Geographic or Otherwise
Along with expanding your scope, you can probably expand your market in some other way. This option may require renting or building new facilities or hiring new teams, but it might not.
You can probably expand your geographic market by expanding the distance you are willing to travel. A retail business can ship or deliver goods. Depending on the business, you could contract out to employees in another region. Due to the digital landscape, you can have workers in other places without having any physical presence.
For many businesses, the internet means you are already part of a global market, at least in theory. When you’re small, though, this idea can seem overwhelming. Start by targeting specific locations, industries, or demographic groups with your marketing, and then expand from there.
Expanding into these new markets can go along with expanding in scope. Still, go back to your business plan to make sure you can support expansion.
6. Spotlight Marketing, Even If It Means Outsourcing
Marketing essentially rolls up all these other strategies for growing small business revenue. Through marketing, you can retain customers, get the word out about discounts, announce that you are expanding in scope, and target new markets. Every small business can benefit from robust marketing.
Though you may be able to do your advertising in-house, consider seeking outside support. Putting money aside for marketing can easily pay for itself if done smartly.
“Knowing how much you have to spend on marketing is critical; even more critical is how you spend it,” marketing expert Caron Beesley explained in a post for the Small Business Administration. “This means having a plan. Your small business marketing budget should be a component of your marketing plan, outlining the costs of how you are going to achieve your marketing goals within a certain timeframe.”
Especially when it comes to digital advertising, some expertise goes a long way—not that you can’t earn the expertise yourself, though. Google Ads, Facebook, Twitter, Instagram, and other platforms will all work differently for your product or service.
You should also think about email marketing campaigns and having a solid website. Content marketing, where you offer useful online resources like a blog or videos, can be effective in grabbing more traffic.
Particularly if your business has a physical location or you service a specific geographic region, you will likely want to do more than just online advertising. Well-crafted print ads and handouts—and an understanding of where to best place them—can have a big impact. Even relatively simple advertising, like quality signage, lets customers know that you exist.
Like all elements of your business plan, you should continually return to your marketing budget and see how it is affecting sales. Don’t be afraid to experiment, but take note of the results to see which elements of your marketing mix are working and which are not.
“Compare tactics, analyze seasonal effects—was one quarter more profitable than another? Why?” Beesley continues. “Above all, have patience and follow through on all your marketing efforts across the organization—it takes a village to build and grow a brand.”