All business types in every sector are capable of growth. Ambition and capability of the business owner can be key. Growth can be planned, but can also happen unexpectedly.
Growing your business can be thought of in terms of increased sales. But, it’s also important to focus on maintaining and growing your profitability. As your business grows, you must register for VAT if your VAT taxable turnover reaches more than £85,000 in any rolling 12-month period.
Growth can put a strain on cash flow, so a rigorous cash flow forecast and business plan that are monitored closely are key areas of your growth strategy. You may need to borrow money or invest savings in to the business to fund growth. So, you need to really want it, understand why you want it and fully think through the implications.
The finance finder tool on GOV.UK is a useful resource.
In this blog post, we'll focus on some key ways to help grow your business.
Business planning
A business plan is not just required to secure funding, it's also vital for managing your business more effectively. By committing your thoughts to paper, you can better understand your business and chart specific courses of action that need to be taken to improve your business. A plan can detail alternative future scenarios and set specific objectives and goals along with the resources required to achieve these goals.
By understanding your business and the market a little better and planning how best to operate within the environment, you'll be well placed to ensure long-term success.
Cashflow forecasts
Cash flow management becomes important when businesses pursue growth opportunities - there may be the need for significant cash injection, in advance of any cash coming into the business. If you're a 'cash-only' business, you can bank the income immediately. However, if you sell on credit, you receive the cash in the future and hence may need to pay some of your own expenses before that income hits your account. Both the Business Plan and the Cashflow forecast are important documents when seeking finance for growth.
Review your prices
Regularly reviewing your prices and checking them against your competitors can be an effective way of increasing your sales, profits or both.
You should try to estimate the likely effect of different price changes on the sales, cash flow and profitability of your business before making any changes. To do this successfully, you need to understand:
- the ‘cost structure’ of your business (including regular ‘fixed’ costs, and ‘variable’ costs that change according to your business’ activity)
- the value your customers place on your products and services
It's worth bearing in mind that offering a discount can sometimes reduce your overall profitability, even if your sales go up. Equally, you might be able to make more profit overall by increasing prices, even if you're selling fewer items.
Increase sales to existing customers
How you go about increasing sales depends on circumstances, such as your business performance. You might choose to focus on customers who have already bought from you, or you could target new customers in your local area, nationally or overseas.
The simplest way to increase your sales is to sell more of the products or services you're currently selling, to the customers who are already buying them. For most businesses this involves:
- persuading one-off customers to become repeat customers
- finding customers who’ve stopped buying from you and trying to win them back
- selling more of the same products or services to your regular customers
Marketing
Small business marketing can be a real struggle for business owners in a competitive marketplace. Faced with the task of getting the word out on a limited budget, it can be hard to know what the best value-for-money techniques are to grow your customer base, increase your exposure and increase your profits.
Marketing can be:
- website marketing
- search engine optimisation
- content marketing
- social media
- email marketing
- online advertising
- offline advertising
With so many different forms of marketing, which one is right for your business?
Digital marketing is vital to the success of many modern businesses. In addition to being a core communications channel, it is particularly beneficial to small businesses since it is largely free. An increasing number of customers also engage daily with social media channels that include Twitter, Facebook, Instagram and LinkedIn. As a result, smart businesses are looking for ways in which to build their brand and customer engagement online.
Further information
Contact the Business Support Helpline via the following channels:
- Telephone: 0800 998 1098
- enquiries@businesssupporthelpline.org
- Webchat
- YouTube
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