“Yeah sure. How do I do that when I’m so busy running my business that I don’t even have time to think about growing it?”

 Sound familiar? It’s a common reply in an age of never ending cutbacks and time constraints, where it just seems too difficult to do anything without spending huge amounts of money or working 20 hours a day. What happened to those dreams you had when you started your business?

There are some simple but powerful ways to grow your business. Here you’ll learn (or be reminded of!) some key definitions and then the main areas you need to focus on to make that dream a reality.

Let me explain. Increasing your sales figures is easy when you know what you’re looking for. Far too many people go into business and instead of them running the business, the business ends up running them, taking over their lives. Owning a business is supposed to give you a better lifestyle, and NOT make you work harder and longer for less money.

So how do you do it?

OPEN YOUR MIND TO NEW IDEAS

If you keep on doing what you’ve always done, you’ll keep on getting what you’ve always got. Simple…. When you learn, you grow and when you grow so too will your business. The exciting part is that the more you learn the better you’ll get at the game of business.

And the only difference between YOUR income now and YOUR income in five years time will be the people you meet, the books you read, the tapes you listen to, and then how YOU apply it all.

For example we worked with an accountant who doubled her turnover with half the number of clients, when she learnt how to tap into the power of working with her past clients. We also helped a hairdresser who, by asking simple questions and following up, added an amazing 78 percent increase to her business turnover.

What areas of your business are potential gold mines for you?

TIME - YOUR MOST VALUABLE ASSET

If you lost your life savings you could always make some more money but if you waste even a minute of your life, you’ll never get that time back. While a new business needs to save every dollar possible and keep overheads to minimum, at some stage you’ve got to decide to grow. Put simply, you’ve got to INVEST rather than SPEND your time. As an owner of a business you’ve got to be certain that every activity you undertake, every job you do, every minute of your working day is invested in doing something that only YOU can do. Always ask yourself this question- “What will give me the best Return on Investment for my time?” And remember, if it pays you back immediately with a few dollars in an hour then you’re probably losing money. I’d rather it paid me back with a few cents a day for the rest of my life. Work with the long term in mind not just the instant rewards.

COST REDUCTION VERSUS INCOME GROWTH

So many business people focus their whole life on cost reduction. Working long hours just to save a wage, cutting costs just to make ends meet. Now keeping costs down is still one of the most important areas of business but, if you really want to grow your business you’ve got to put more of your time into income generation than you do cost cutting. Remember, if you were to cut your costs by as much as you possibly could and still leave your company running, you’d probably only add about 10 or 20 percent to your bottom line. Yet through building your income, the bottom line is limitless.

DISTRIBUTION AND MARKETING

Business has two major parts. And both of them are important, you’ve got to put 50 percent of your time, effort and investment into distribution, that is, getting your products and services to the market place. The other half of your time should be spent on sales and marketing - getting the market place to come to your products and services.

LIFETIME VALUE

Think about this for a moment, how much are you going to spend in your lifetime on something as simple as toilet paper? Thousands of dollars? How much will the average customer in your business spend with you over a lifetime?

Let me give you an example from Brad Sugars’ book Instant Cash flow. In his dog food business the average person spends about $800 a year on their dog, and the average dog lives for about 10 years. So, assuming that the customer only stays for half of that time, five years, then they’re worth $4,000. Then, what if they refer two new customers in their first year? Now they’re worth three times $4,000 which equals $12,000.

You must establish this long term view of their value before you can appreciate how important it is to develop a relationship with customers and ensure everything is done to keep them as long as possible.

TEST AND MEASURE

This is the KEY!!! You cannot manage what you do not measure. And how do you grow if you don’t know the areas to work on? When it comes to your business you must find out what’s working and what’s not. Why spend $250 on an ad in the local paper if you’d be lucky to get $150 worth of business out of it? One of the big problems with marketing is that many people think their ad is bringing in more business than it really is because they don’t properly test and measure. How do you do that? You’ll want to ask each and every customer and prospect where they heard about you and your business. This will give you an idea of what’s been working and what hasn’t. You’ll also want to find out about the five key areas listed below…

SOME NUTS AND BOLTS

Your business is broken up into 5 key parts.

A Your number of leads: This is the total number of potential buyers that you contacted or that contacted you last year. Most business people confuse responses, or the number of potential buyers with results. Just because the phone is ringing doesn’t mean the cash register is!

B Conversion Rate:. The percentage of people who did buy versus those who could have bought. For example if you had 10 people walk through your store today and you only sold to three of them then you’d have a conversion rate of three out of 10, or 30 percent. There is tremendous opportunity here. You’ve already got them interested, now you just have to get them to buy. Most people guess their conversion rate and believe it is a lot higher than it really is. Having a conversion rate of 20-30 percent is great. Why? Because imagine how your business would run with a conversion rate at 60 or 70 percent! Your Number of Customers is worked out by multiplying your number of leads by your conversion rate.

C Number of Transactions: Some of your customers will buy from you weekly, others monthly and maybe even just once in a lifetime. What you want to know is the average. Once again, here’s another goldmine. Most business people never even collect a database of their past customers let alone write to them or call them and ask them to come back.

D Average dollar sale:. Here’s one variable that at least some businesses measure. Once again some may spend $5 and some $5,000, but it’s the average you’re after. Just an increase by a few dollars on each and every sale could be all it takes for your business to really grow. Your turnover is worked out by multiplying your number of customers by the number of transactions by the average dollar sale.

E Margins: This is the percentage of each and every sale that’s profit. In other words, if you sold something for $100 and $25 dollars was profit, then you’ve got a 25 percent margin. Remember, this is after all costs are taken out. Increasing the margin on your turnover will give you greater profits.

Britta Christiansen is one of Action International’s Business Coaches.

Originally published in Her Business magazine.

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