by admin | March 25, 2019 10:23 am
Let me ask you something… Aside from the dead give-away coming from the title, how many ways do you, or did you, think there was to grow a business? Any business.
1? 3? 10? 150?
When ever I ask this to an audience I get countless people shouting out a variety of answers ranging from 1 to, well, unlimited.
It’s true… People actually think there are “unlimited” ways to grow a business!
Truth be told, there are only three ways to grow and business.
THREE?! Have you lost your mind?
Nope, and I welcome you to challenge that.
There are only THREE ways to grow ANY business.
Here they are:
First, you can increase the amount of clients you have.
Second, you can increase the size of the transaction.
And third, you can increase the amount of transactions that occur per year.
When you apply pressure or focus on all three of these ways to grow your business, you can grow GEOMETRICALLY, anything is linear and limiting.
Let me explain…
The sad truth is that most people focus primarily on number 1, growing the client base, without realizing that this is by far the slowest, most expensive and time consuming method there is, and is very linear.
Often, the cost to constantly acquire new clients is high, and usually doesn’t become incrementally MORE profitable as the business grows because, unless the business is under-performing, typically the overhead goes up alongside with the increase in clients. If you had 10 clients and running at max capacity, and you add 10 new clients, you need more staff, products, staff, etc.
Let’s play this out…
Let’s say you had 100 clients, and those 100 clients purchase once per year, and they spend 100 bucks. (Just to keep the math easy!)
100 clients x 1 per year x $100 = $ 10 000
So 100 clients spend 100 bucks with you once a year, you’re bringing in 10K.
Now let’s say you bust your butt and generate a 10% increase in your client base, so now you have 110 clients. Of course, for this example we’ll assume you didn’t lose any of those original 100. (a joke, I know, but that’s okay)
Now your business is doing…
110 clients x $100 x 1 year = $11 000
10% increase right? Seems pretty good?
But that’s a hard, slow approach. And expensive. I mean, when your business is new, just starting off and still in its infantile stages, 10% increase may not seem that tough, but that’s because a new business picks off the easy, low hanging fruit. Once all the easy clients have come and (hopefully not all) gone, that’s when we find out what it really cost to bring in a new client.
Source URL: https://indiemediamag.com/3-ways-to-grow-any-business/
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