The Ultimate Methodology For Small Business Growth
What you’ll learn in this free marketing video training:
- The real problem with small business owners
- How to decide what you want and how to grow your business so you can sell or leave a legacy
- The Stages of Small Business
- The Solopreneur (the side job and the self-employed)
- New Employer doing $100-$300k in annual revenue
- Steady Operation doing $300k-1MM in annual revenue
- 7-Figure Business doing $1-3MM
- Growth Company doing $3-10MM
- It’s not how much money you make… It’s how much money you keep
- Ways to Increase Gross Profits
- Decreasing COGS vs. Increasing Revenue
- How to Increase Revenue
- Building Your Marketing Team
- Proper and Effective Delegation, At Acceptable Costs
- Growth company examples vs startup / small company examples
- Better options
How to Scale Your Business and Dominate Your Marketplace Audio Version (on Soundcloud)
A Sneak Peak at the report…
In this report, I’m going to teach you how to scale your business and dominate your marketplace with the ultimate methodology for small business growth. I want to congratulate you for being reading this today. Henry Ford once said, “Thinking is the hardest thing a man can do, probably the reason so few of them do it,” and you are challenging yourself by thinking. That’s what you’re going to do here, and I think by the end, you’re going to be really excited about what you learn.
The problem with most small business owners is that the vast majority are good at what they do but never get out of the “solo-preneur” mindset. There are 16 million in America who are doing their business as a side job and, and six million are truly self-employed, but only about 1.7 million are new employers with a partner or assistant. The vast majority is doing the entrepreneurial thing almost as a glorified hobby—or basically, they own a job. Starting a business, running a business, and scaling a business all require different mindsets, different strategies, and different techniques, and for most people, this creates massive doses of stress, but it doesn’t have to.
First, decide what you want.
What business are you really in? What business do you want to be in? What do you want personally out of it? Are you trying to grow a large business because it excites you? Do you want to build it up, literally, or brand recognition, et cetera, just to sell it? Do you secretly want to just escape?
“One reason so few of us achieve what we truly want is that we never direct our focus; we never concentrate our power. Most people dabble their way through life, never deciding to master anything in particular,” Tony Robbins. I agree with that quote. It’s really useful.
The Stages of Small Business
Recently, I attended a GKIC event, and the founder of Infusionsoft had a fascinating slide in his presentation and did training on the stages of small business. If you ask 10 different people, you’ll get 10 different answers, and here’s their breakdown of these stages of small business and the biggest hurdle in each stage. We’re going to go over them one at a time because I think this is going to make a huge difference for you.
First of all, let’s look at the initial stages here, the solo-preneur, which is the side job or the self-employed, and the whole focus here is usually to quit the day job. This is where most people start. Usually, it’s just one person. They’re making anywhere from 0-100K, and usually, the side job is the 0-4,000 a month, and maybe the self-employed would be 4-10. The number in the US is 16 million for the side job, six million for self-employed. The team, usually there’s an owner. They get a little bit more. Maybe they’ve got contractors, but their biggest hurdle is time and leads, and so if you’re in that phase, you know exactly what I’m talking about, and leads, of course, is solved with marketing, which most of them have not mastered at that point.
Now, if you’re one stage ahead of this, you’re looking at being a new employer or you are a new employer, usually the sales there is the 100-300,000 dollar annual level, and the big challenge is sales, creating a structured sales environment, having trained sales professionals, and really duplicating yourself. If you’re the one that does all the sales, that can be the biggest challenge is finding someone else that will help you with sales.
Then the steady operation level, the 300 to one million, the challenge is really in marketing and the service, so really running, they call it, with the business, and usually, 2-10 involved, people, in the 100,000 to one million point. There’s a little gray area in there, but really, we’ve got going from maybe partner or assistant to actually have a team, and that’s where a lot of the people I’m working with are is right in this new employer and steady operation levels.
Now, the biggest hurdle for most people is just getting from solopreneur number one to number two or number three. That’s a huge hurdle for most people, and most people never do it, but you will notice that in the US, there are 1.7 million new employers, which is not huge, but it is doable
Let’s focus now on the slightly higher level, the seven-figure business, and the growth-company. On the seven-figure business, we’re looking at about 1-3 million dollar mark, and the challenge there is people and systems, duplication, finding people, creating systems, to automate what you do and so that you’re not responsible for every little decision in every moment. That’s how you start to create leverage, but in a growth company, true leverage is not really achieved until you reach the leadership and culture level where you actually are creating a culture around the scalability of a growth company.
Andrew Carnegie said, “No person will make a great business who wants to do it all himself or get all the credit,” and that is an example of it.”
Finally, when you look at the big picture, you see the stages from one to five, and you probably are going to find yourself somewhere in there, and I encourage you to identify what level you’re at and what the challenges are and seeing what you need to do in order to scale.
Another thing to remember is it’s not how much money you make; it’s how much money you keep.
How To Affect Gross Profit
We’re going to talk about how do you scale, how do you become a growth company, how do you get higher up on that chart? Well, first of all, we have to cover a couple new concepts about gross profit. There are different ways to affect gross profit, and typically a solopreneur or somebody who’s running with their company, trying to grow it but they’re still in those earlier phases, even after achieving more of a larger size, 5, 10, 15 million, typically, the entire focus is on decreasing cost of goods sold.
In other words, if we say, “How do you increase your profit?” Well, you say, “Well, here’s how much I’m making in revenue. Here’s how much I’m spending to get that. How can we save money to increase the bottom line?” That’s typically the entire focus, but the other side of it is you could, of course, is increase revenue. If you increase revenue and you keep the cost of goods the same, COGs, then you essentially are going to affect, increase your gross profit—pretty simple calculation, right?
Let’s look at little closer at that, though. When you decrease cogs, pretty much that’s it. Most companies have already done everything they can in that area, or they’re striving to do so in, essentially additional gains in decreasing COGs are incremental at best. Typically, you save a little bit here and there, but it won’t substantially impact the bottom line after your initial effort. If you make an effort to decrease cost of goods sold, pretty much you’ve made your savings, and then it’s difficult to continue doing that, but over on the increasing revenue side, that’s where things can really get exciting, and most business owners, especially small business owners aren’t used to looking at all of the potentials there.
The first thing you could do is you could increase new customers. That’s obvious. That’s what most people are focused on. Typically, that’s going to be where all your energy goes, and that is a good place to go, and typically, if you get more customers, then you’re going to increase your profit without having to deal with COGs anymore, but let’s look a little closer at increasing new customers. There are several different ways you can do that.
First of all, you can increase new customers through advertising and sales. Now, that might be where your company or you or your company are trying to focus some attention. Typically, the advertising side of it is just scattershot. It’s the shotgun method. They’re trying anything and everything, and it’s not very scientific, and sales are also not very duplicable. Typically, the focus here is to try to just ram more leads into the system to create more sales, which is not a bad thing to do, but basically just increasing your advertising spend or increasing your sales, simply focusing on spending more money on it is just one way, or just creating more volume is one way to do it.
But you can also increase new customers through referrals. Many different companies don’t focus on referrals. They’re reactive to referrals. In other words, if a referral comes in, they say, “Oh, great. That’s nice. Let’s try to get more of those,” or they’re a little bit active, which is they’re trying to remind their customers occasionally to give them referrals or they occasionally ask. Then there’s being proactive and orchestrating referrals, which is creating entire systems around generating referrals and campaigns around referrals and follow-up, automated and manual follow-up systems for referrals, and contest, etcetera. There are a lot of things you can do in that area, but we’re not done yet.
The other thing we can do in terms of increasing revenue is increasing customer lifetime value. It’s a little bit different concept. In other words, the lifetime value of a customer, how many times a customer will buy, how much they will buy is a huge area of potential growth in a business. In fact, I would suggest that before you even bother doing anything else, the first thing to do is look for the low-hanging fruit and increasing your customer lifetime value. There are several different ways we can do that.
First of all, we could increase revenue per transaction. Every time a transaction happens, there is an opportunity there to look at the sales process, look at the offer, look at product or service that you are offering in that moment and increase that revenue during at that one time. That could be done through up-sells, cross-sells, down-sells. That could be done through back-end offers.
The other way you can increase customer lifetime value is by increasing the number of transactions. The more you offer, having a catalog, having a process of follow-up, customizing your sales offers by the behavior of the customer. If you know a customer tends to buy a certain thing, offering more of that or something similar or something that works along with that thing that you’re offering that’s complementary to it. There are many ways of increasing the number of transactions.
In addition to increasing revenue per transaction, we can look a little closer at that. We could also increase prices. You’ve got the revenue per transaction can be affected by the price. If you increase the price, just that one thing alone can often make an incredible difference in your ROI, in that profit for your business. A lot of business owners are afraid of increasing prices, but when they give it a try and they target better their ideal client, they find that the client has less price sensitivity because they’re ideal and they tend to be able to do, make a lot more money compared to the number of customers they might potentially lose if they’ve differentiated themselves properly in the marketplace.
Another thing that can be done to affect increase revenue per transaction is to increase the quantity of goods and services sold. In other words, you can give a quantity discount, you can find ways to do add-on sales, you can, again, going to the backend and creating up-sells and down-sells and cross-sells. There’s a lot of different ways to increase the quantity of goods and services sold.
Now, getting back to increasing the number of transactions, how would you do that? Well, you could increase purchase frequency—you could work on increasing the number of times someone purchases. If the average sale happens once every six months, look for ways to make it happen once every five months or four months or maybe there’s a smaller item that could be sold every two months, for example. The purchase frequency, how often someone wants to come back can be also changed by the amount of the product or service you sell and at what point sometimes can affect the number of times someone purchases.
Also, just increasing customer lifetime in general. If you’re a one-hit wonder, you sell somebody a roof, and then they never come back to you again, that’s not a great customer lifetime value. It was a great one-time purchase, but what else could be done to increase that customer lifetime? Oftentimes, it’s as simple as follow-up. It could be as simple as one technique. There are many, but I’ve seen people do things like a print newsletter, not email, but print, something that’s tangible that people tend to have a higher perceived value, and they don’t forget about you. Then the next time they’re thinking they need something, they come back to you. Increasing customer lifetime value is another way to increase the number of transactions overall.
When we look at ways to affect gross profit, again, we could camp out on decreasing COGs, and that’s it. There’s not much else you can talk about there. That’s one element, or you can focus on increasing revenue, which has many different elements. Increasing new customers with advertising and sales and referrals, increasing customer lifetime value with revenue per transaction, increasing prices, increasing quantity of goods and services sold, increasing the number of transactions, increasing the purchase frequency, increasing customer lifetime. Look at that. Look at the number of ways that increasing revenue can impact the bottom line, and that is what I want to encourage you to do in order to create a company that has the momentum, that has the money, the cash flow necessary to fund growth and to fund team building and to fund your dream.
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