Wednesday, March 12, 2014

The ABCs of Small Business Growth Strategy


All businesses are focused on creating opportunities for driving revenue and creating profitability. That focus involves strategic as well as tactical goals.  Otherwise, driving revenue and creating profitability won’t necessarily translate into business growth and sustainability. It might translate into indigestion.

You want to be in business next year, and the year after that, and onward...aren’t you?

The question to ask yourself is: Are your eyes bigger than your stomach?

Are your business goals a matter of winning the Coney Island Hot Dog Eating Contest? (That's a tactical objective that strikes me as painful.) Alternatively, do your goals involve the process and discipline involved in training for a marathon race, ensuring you maintain adequate caloric and fluid intake along the way, and finishing the race strong?

Here are 3 strategies to keep in mind when focusing on moving your business into growth mode.

A. Develop and retain a loyal list of A-Customers

You do your best work for these customers. You are on the same page. You communicate and collaborate. While your current customer base may involve only a few of these types of customers, your growth strategy focuses on creating the conditions where A-listers comprise at least 50% of your customer base.

B. Develop and Retain a loyal list of B-Customers

Unlike A-listers, these B-Customers may be small to mid-sized businesses themselves. As a result, they may not offer the opportunities for diversification into new markets or industry verticals that A-listers do. However, like A-list customers, B-listers represent repeat business and the type of business which brings out your best efforts. Your output typically is error-free while not as complex as that required by A-listers. These B-listers represent a solid means of stabilizing cash flow throughout your fiscal year. What percentage of your current customer base is comprised of B-Customers? What would happen to the stability of monthly cash flow if your customer base was comprised of at least 50% B-list customers?

C. Focus on eliminating C-Customers

These folks offer smaller, commodity opportunities. They also take up a lot of your time with their demands and ambiguity. Yes, some of them may be your original customers, and you have a sentimental attachment to them. Yet over the years, these C-Customers haven’t increased the amount of business they do with you. They are fickle and price-sensitive. C-Customers are the types of customers you are tempted to do business with when cash flow is drying up. You always regret your decision. Once you choose to do business with them, you inevitably miss out on more lucrative opportunities with those desirable A- and B-list folks. You know who your C-Customers are already, don’t you?

Focusing on continuously analyzing your customer base is an integral part of business growth. If you are a small business looking to move to the next stage, develop a systematic and disciplined process for evaluating whom you are doing business with. Each month, segment your customer base based on the long-term potential they present your company for growth.

Make sure your eyes are only as big as your stomach and you’ll be in excellent shape.
Align your growth objectives with acquiring and retaining A-List and B-List customers. You both will be more satisfied by the experience of doing business with each other. You will be hungry to continue your collaboration, as well. A loyal, retained and satisfied customer base means growth in anyone’s book.