If you listen to the noise coming out of Raleigh — and Washington — you might conclude that the only way to prosperity is to cut expenses. And then cut more expenses. For sound businesses, managing and controlling expenses have always been critical to success, and there are situations where reducing expenses are necessary and appropriate for survival. But a company’s long-term success is also dependent upon its ability to grow and increase revenues and profits.
Growing business is easy to say, but hard to do. Here are some ideas that might help.
If you are a brick and mortar operation you are restricted by location. Is it time to add another location to expand your business and introduce yourself to a new set of customers? Location is everything and adding a second site can increase sales and profits, particularly if you are able to expand while keeping fixed costs — administrative costs such as accounting — at the same level.
Adding physical space makes sense for some businesses, but using e-commerce to expand your reach may cost less and offer greater revenue opportunities. There is some up-front cost associated with adding e-commerce capabilities that allow you to sell through your website and building search engine optimization into your site, but e-commerce can take a business to a global audience.
Consider diversifying into related products or services. Many hair stylists have learned this lesson and add to their business by selling shampoos, conditioners and other products in addition to taking care of your hair. Restaurants can consider adding catering services or they could expand by offering specialized products that they successfully use on their menu such as a line of their top-secret BBQ sauce or special salad dressings. Large retailers also get into the diversification game — think of Best Buy and their Geek Squad which will come on-site to assist with the installation and use of equipment that you purchase at their store.
Can you use your existing product or service to enter new markets? As an example, the government sector is a large, but specialized market, which may offer new opportunities if you take the time to learn the land. Most companies segment their customers into target markets. Now might be the time to look at new market segments to grow your business.
Do you have a product or service that is doing well but little capital for expansion? Consider franchising or licensing. Franchising allows someone else to take your business model and name and use it in an agreed-upon location, paying you a fee for this honor. Licensing agreements allow other companies to use your company or brand name to develop and sell complimentary products while paying you a fee. Licensing and franchising agreements are potential growth vehicles for established businesses with recognized brand names. And franchise and licensing agreements can be complicated, so get your lawyer involved.
Diligent business owners and managers always are watching the expense line and taking the necessary actions to protect their business. But top-line growth is necessary for a thriving business. You need both — expense control and top-line growth — to insure your long-term success.
Do you have a business question or topic that would make a good column? Send your ideas or questions to jeff.neuville@b-assistnc.com and share your business experience with others.
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