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How to Expand Your Small Business


Robby

When it comes to new businesses here in the Hoosier state, we’re lagging behind the rest of the country. People are starting companies every year, but new statistics show that we’re nearly in last place.

That’s the news from the IndyStar who recently reported that “Indiana has fallen from 30th in the number of business startups in 1999 to 47th in 2013.”

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© Flickr User Grand Canyon National Park

If you’re thinking of starting a small business, or more importantly, expanding it from where it is today to where you want to be, there are a few options to consider. Here are the main choices:

Raise Your Prices

If you sell your products or services for more money, and your volume doesn’t decrease more than the difference, you’ll generate more net revenue that you can plow into growing the company. The math on this is pretty easy: Say you sell 100 widgets a week at $1 each and raise your prices to $2 a widget. As long as you sell more than 50 widgets, you’ll make more money overall.

Lower Your Prices

This one can be counter intuitive. How could dropping your prices help you grow your business? This is really a case of increasing your customer base enough to make it up in volume. Again, consider selling 100 widgets a week at $1 and dropping the price to only 50 cents each. If you can now sell more than 200 a week, you are making more revenue overall.

Lower Your Costs

In both previous examples, we didn’t talk about the difference between net revenue and gross revenue. Obviously it’s not free for you to make or do whatever you do, but you may be able to do it more inexpensively. Perhaps you can change suppliers or get them to reduce the price you pay. Maybe you can work with fewer employees or negotiate lower rent. Maybe your accountant knows about tax incentives. There are lots of ways to reduce your costs, and make more with the difference.

Change Your Market Offerings

This one can go in either direction, Perhaps you need to present a wider variety of products to the marketplace so you can make more money in different areas. Or, maybe you would benefit from offering fewer distinct items to your customers—the “do one thing, do it well” strategy. In either case, you may be able to better maximize your returns.

Seek Additional Financial Resources

A popular option is to leverage your assets to bring more money into the company, and use this to grow. You can go for a straight loan from individuals or other businesses. If you issue invoices and your clients are slow to pay, you can use a factoring service who will “buy” the invoice from you at a reduced rate and collect on your behalf. You can also go after old debts using a collections service.

And if your company has non-cash assets, such as real estate, inventory, or equipment, you can often use the inherit value in these to get cash. This can be through a sale or through other financing instruments. In all cases, talk to your accountant.

Work Smarter or Harder

Lastly, no discussion about growing a business is complete without mentioning that you can work harder or smarter. Increases in efficiency or increases in effort can both bring in more money. That might be a couple of additional hours of sales calls. Or better yet, sales training to make your selling more effective. There’s always the chance to do things a little bit better than before.

Good luck making your business grow!

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About the Blogger: Robby Slaughter is a productivity speaker and expert. He is a principal with a AccelaWork, an Indianapolis consulting firm.

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Tue, September 1 2015 » Self Development

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