Driving towards growth and profit in your business – The 6 strategies to explore
Most successful entrepreneurs know how to offer high-quality products and services. But expertise and a brilliant mind alone do not make a business owner make.
The fact is not all profitable businesses become a resounding success. Some end up stagnating and ceasing to grow at all.
In many cases, the problem comes from the top.
Entrepreneurs may not be realistic about the growth potential of their startups and try to scale up too fast.
Sometimes, the business model may lack substance if the founder doesn’t have the know-how to grow a company.
Another mistake can be seen in founders who don’t put enough focus on systemisation.
The list of potential pitfalls goes on and on.
The good news is that none of these problems is unavoidable.
With the right strategies in place, businesses can achieve and sustain rapid growth.
This article will go through six of the best strategies to improve business performance.
The 6 Strategies
Strategy #1 – Define your competitive advantage
One of the key growth drivers is clarity on your competitive advantage. It’s the differentiator that makes your business potentially more successful than others.
Your competitive advantage can make your product more enticing to buyers and your business more attractive to investors and it can also allow you to execute your plans faster and more effectively than competitors in the same niche.
Unfortunately, not all entrepreneurs have the necessary clarity to convey their competitive advantage. But it should be something easily identifiable in the business’s messaging and marketing strategy.
Defining your competitive advantage is a particularly important part of raising capital — critical when trying to scale up a company.
Anyone looking to invest will want to hear about your competitive advantage. Why should they invest in your company instead of others in the same space?
In short, investors want to know if there’s an edge there that no other company has. And it can come in one of three sources of strategic position:
- Access—segmenting customers who are accessible in different ways (geography, scale, or other differentiator that requires customisation of activities to reach this group of customers).
- Need-based—targeting a segment of customers and serving most or all of their needs.
- Variety—producing a subset of an industry’s products or services.
In addition to the above, competitive advantage can be gained through value disciplines, including:
- Product leadership—building a culture that continuously brings superior products to market, enabling the company to charge premium market prices thanks to the experience they create for their customers.
- Customer intimacy—the personalisation or service the customisation of products to meet differing customer needs.
- Operational excellence—automating manufacturing processes and work procedures in order to streamline operations and reduce cost.
It’s up to you to clearly identify and define your competitive advantage, preferably in the context of growth and profitability.
2. Figure out what your customers need (not want)
Many business owners focus too much on what their customers want. But the reality is, customers don’t always know what’s best for them.
That’s why if you can identify and deliver what customers need, growth can happen faster. But how do you approach this?
Do an analysis of tangible and psychological motivators that push customers into making a purchase. This can easily become a complex research project, especially since psychological motivators are more challenging to identify.
But to give you an idea, here are some examples of what most customers look for:
- product or service reliability
- excellent customer service
- streamlined shopping experiences
- good value for money
- niche and useful products and services
Think about the things that can help make customers’ lives better or easier.
Keep in mind that direct feedback is your best resource when it comes to finding out if you’re on the right track.
Another way to identify customer needs is to keep tabs on your competitors. Check out what makes other companies successful and compare your approach to customer satisfaction and product delivery.
3. Focus on customer retention
Companies tend to spend more on new customer acquisition. This is despite the common knowledge that brand loyalty drives growth.
The fact is, loyal customers can ensure healthy cash flow, which you can, in turn, use to fuel growth.
And the more customers you can keep in the long term, the more predictable your business performance and the easier it is to meet your goals.
Here’s one of the biggest perks of customer retention: it’s much cheaper to sell to existing customers than to attract new ones.
Here are a handful of things that can help you keep customers over the long term:
- soliciting feedback and making necessary changes
- noticing signs of customers’ impending departure
- relevant special offers to existing customers
- personalised follow-up messages and campaigns
- rewards for best customers
All of these show customers that you value their loyalty and contribution, and it is human nature to reciprocate in kind.
It’s also worth mentioning that existing customers who are fans of your company are more receptive to upsells and new products.
4. Avoid organisational chaos
Here’s another tip on how to improve efficiency in a business and facilitate growth — stay away from chaos in your company.
Chaos can only lead to a loss of confidence and focus. This happens not just at the top but at all levels of management.
A chaotic organisation, particularly at the leadership level, makes it easy to miss significant opportunities or a need for change. You can end up making the wrong decisions or unwittingly promote operational inefficiencies that hinder your progress.
It’s best to work on anticipating shifting trends that affect stakeholders or customers.
Also, it’s critical to reinforce the company’s vision and keep everyone on the same page.
Communicate better with everyone responsible for your company’s success, be it partners, managers, or employees.
It’s essential to listen to advice, feedback, and complaints and to treat your people equally. More face-to-face meetings are likely to be helpful in this regard.
As a business owner and leader, you also have to project confidence. This doesn’t mean you should give anyone a free ride, as accountability is at least just as important as rewards.
5. Look for ways to break into new markets
Old habits die hard. If something works, why change it, right?
Here’s one good reason: Stepping outside your comfort zone is almost always the best way to find new opportunities. For example, breaking into new markets is a terrific way to drive growth and profitability.
Past success in one market is not a guarantee of future success in the same market, at least not in today’s fast-changing world.
Although breaking into a new market can be like starting from scratch, it can pay big dividends in the long run.
Don’t discount the idea of making short-term sacrifices for long-term successor of using external expertise when breaking into new markets.
This is where many business owners fail — they find it too difficult to hand over the reins to someone else, even when they don’t have the necessary skills to oversee the transition or pivot.
6. Enhance and engage employees for a competitive differentiator
Employee engagement is among the top differentiators that can really uplift your company.
Sadly, in a typical company, up to 70% of employees may have neutral engagement and as many as 20% may be disengaged.
That’s detrimental to any business, worse for those in a customer-facing industry.
It can affect customer satisfaction and, consequently, retention and your ability to identify customer needs.
It’s also worth pointing out that highly engaged employees are more productive. They’re more likely to share core business values and work towards shared company objectives.
Employees crave an engaging work environment that promotes respect, motivation, support, and encouragement.
It falls to upper management to put in place efficient business practices that make that environment a reality.
Organisations that consistently put effort into keeping employees happy will have an easier time growing.
Efficient strategising is the key to growth and profit
Perhaps more than a business owner’s dispassion, their inability to strategise can halt their company’s growth in its tracks.
What it all comes down to is using the best strategies from the ground up.
Accelerating growth is possible in any space if you understand the market, customers, employees, and business fundamentals.
And the sooner you implement proper business practices, the better.
Efficient business practices may not come naturally to business owners who focus more on vision and product development. But you can learn the necessary skills or surround yourself with people who can guide you in the right direction.
And if that sounds like something you might be interested in, expert help is at hand. Call a Modoras professional today at 1300 888 803 for more business optimisation advice.
Below are the articles that may interest you:
- How to succeed in business
- The 11 Top Tips for Growing Your Business in 2021
- Why is Business Growth Important
IMPORTANT INFORMATION: This blog has been prepared by Modoras Accounting (SYD) Pty Ltd ABN 18 622 475 521. The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals’ personal circumstances have been taken into consideration for the preparation of this material. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Accounting (SYD) Pty. Ltd. recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Accounting (SYD) Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Accounting (SYD) Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Accounting (SYD) Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication. Liability limited by a scheme approved under Professional Standards Legislation.