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8 Tips for How to Grow Your Small Business
Knowing when and how to help a small business grow may be tricky. Grow too quickly, and you could throw your cash flow into disarray, put stress on your operations, and experience other potentially business-threatening issues. Grow too slowly, and you might miss valuable opportunities to gain market share and increase profitability. Here are eight tips you could follow to help find the right time and pace to grow your small business.
Knowing when and how to help a small business grow may be tricky. Grow too quickly, and you could throw your cash flow into disarray, put stress on your operations, and experience other potentially business-threatening issues. Grow too slowly, and you might miss valuable opportunities to gain market share and increase profitability. Here are eight tips you could follow to help find the right time and pace to grow your small business.
1. Assess where your business is at financially
Small business owners looking to expand could begin by evaluating their company’s financial performance. Your cash flow is a key metric that can help chart your small business’s financial health. It could tell you if the business has sufficient liquidity, investment capital, and financial flexibility to grow.
While working out how to grow your small business, you’ll need an idea of how your cash flow changes over time, how it could enable your growth, and how growth could impact your cash flow. Using a cash flow analytics tool could help. It is intended to give business owners a clearer picture of their finances across multiple accounts, helping to make it easier to manage cash flow, make sound financial decisions, anticipate cash flow fluctuations, and plan.
2. Perform market research
One of the biggest pitfalls a small business might encounter is outgrowing the available market. Imagine a restaurant doubling its seating footprint and kitchen capacity without generating enough potential customers to fill the seats. Understanding your market is crucial when determining how to grow a small business.
Before investing in business growth, small business owners should consider conducting thorough market research. This involves getting a clear understanding of your current customers, as well as potential new customers you could attract when you grow.
3. Facilitate customer retention
Part of determining how many customers your growing small business could serve is focusing on existing clientele — not just potential new customers. Business growth often means change, and some customers may not accept it when a small business they love isn’t the same.
Before planning ways to attract new customers, you could aim to strengthen your existing customer retention efforts by:
- Launching a loyalty program
- Improving the customer experience
- Building community through email or social media
- Communicating clearly about upcoming business changes
Having existing customers stick with you through changes is one of the keys to successfully scaling your small business.
4. Focus on your employees
Small business owners know the right mix of employees could make or break a business even when you’re not in a growth phase. When determining how to help a small business grow, you should also consider your staff’s openness and capacity for change.
First, consider your existing employees’ bandwidth for growth:
- Are they interested in more hours?
- Are they ready for additional responsibilities?
- Would any staff members be well suited to upskilling opportunities?
- Are there ways you could boost employee satisfaction?
The more benefits your employees experience from your business growth, the better the chances that they will buy into its success. It may also reduce the number of new employees you need to hire to accommodate growth. Not overworking your employees may be key to their job satisfaction. You may need to fulfill additional staffing requirements with new talent. Hire employees for your small business who express interest in growth, so their needs match those of your growing company.
5. Work on your social media presence
Even small businesses that operate solely through brick-and- mortar transactions should consider having an online presence, including social media. Not only do customers often expect to find business hours, contact info, and other crucial business information through your social media pages, they may also look to engage with business. They want to feel like a part of a customer community and find out what’s new with the company.
This is especially important during a growth phase. If your services are changing, the building is under construction, or your hours might be different for a period of time, it’s crucial to keep customers informed and engaged.
Social media is an effective tool to allow existing and new customers to come along for the ride of your small business growth and be ready to celebrate your expansion. You could start building your social media presence ahead of your growth to help engage customers before and after changes.
6. Dedicate time to networking
Connecting with new vendors and partners can prove key to growing a small business. Whether it’s adding products, looking for investors, or sourcing new accounting practices, the number and type of business relationships you have is bound to change.
Before you might even identify those needs, you might want to start networking with potential business partners. You’ll want to consider as many options as possible when looking for new business relationships, and getting to know potential partners in a casual, low-stakes environment is an effective way to expand your network.
Consider joining networking events and groups, such as local business associations and clubs. Signing up for industry conferences and other educational opportunities could also be a good way to forge new relationships. Another option for small business owners is to connect with online professional communities of like-minded owners and industry experts. Not only can making these connections help you find vendors, but it could also help you find investors for your growing business.
7. Explore marketing strategies
Usually, increased marketing is a driver for more business. Do you know how your competitors are marketing their services? You could look at where they advertise and how they manage their online marketing efforts. You might gain some valuable insights into what you could do better.
8. Consider funding options
Growing a business takes money. Cash on hand to buy inventory, hire help, and increase marketing efforts is often a necessity. This is where cash flow projections could help assess how much funding you may need to support your small business’ growth.
Consider your options — like a business line of credit, credit card, or merchant cash advances — to help you grow your business.
What to Consider When Preparing Your Business for Growth
Even if you’ve created a business plan that factors in future performance, these are typically just rough estimates of what you think might happen down the road. Yet as you begin to get into the groove of your day-to-day business, it’s easy to lose track of what’s needed to keep propelling growth.
Here are some of the common considerations to explore when thinking about how to grow your small business.
1. Scalability
With fewer barriers to entry for startups, anyone with ambition and a great product or service could start selling on popular retail sites. But not every business is meant for scaling up.
A lot more goes into growth than simply generating more sales. To bring in additional revenue, you may have to modify operations, production, staffing, and location. This is not always feasible for a small business. If the business is built around a skill you have or a product you make, you may find it difficult to scale. But this doesn't have to be the case, especially if you can train others.
2. Vision
It’s important to ask yourself a few questions:
- What would your business look like if it grew and profits increased?
- Could you juggle more customers and still have time for a life outside of your business?
- Do you want the added stress and responsibility if this happens?
Not every business’s growth trajectory is the same. For some, it might mean becoming a multi-million-dollar, global enterprise. For others, it could be as simple as ramping up sales enough to leave a day job. Defining your interpretation of success is critical for preparing for growth, and there’s no one answer that’s right for everyone.
3. Inventory
If you sell products, inventory is a key consideration when preparing for growth. Inventory management can be a particularly challenging aspect of growing a business. Would you be able to get more of what you’re selling if there were greater demand?
If you’re making handicrafts and already feel maxed out, the answer may be no. However, if you have a supplier who could easily provide additional inventory, your business might be well positioned for growth.
4. Equipment
What works sufficiently when you have a few customers might become incredibly slow and inefficient when the business begins to grow. Everything from credit card processing devices and printers to packaging machinery and delivery trucks may need to be evaluated before you take the next step in your business’ growth.
5. Vendors
Almost every business in growth mode hits the point of having to change vendors. It’s well worth your time and effort to sit down with them and ask if they can support your growth. If they can, then you might be able to grow together. If not, it’s fair to consider moving on.
6. Headquarters
Many small businesses start in garages or around kitchen tables. But many can’t sustain themselves in these makeshift spaces.
When considering your goals, envision where you could make them happen and how much it might cost on a monthly basis. Having the right place to grow your business could prove pivotal to your ability to hire more staff, increase production, and diversify your products.
FAQs About How to Grow a Small Business
What are three ways in which a business could grow?
Although there are multiple ways to grow a business, the three primary ways are:
- Grow the number of customers: Whether it’s opening a new location in a different market or marketing to a new target audience, you could grow your small business by increasing the number of customers who find and buy from your company.
- Increase purchase frequency: Get your existing customer pool to return more often. You could do this in many ways, such as by offering loyalty incentives or launching new products or services that draw customers back.
- Boost the average value of a sale: You could grow your small business by making more money from each purchase. Options for this strategy include adding low-expense products or services to your offerings or upselling premium versions of existing products or services.
What are the four growth strategies?
You may find the best path for your unique small business with these four growth strategies:
- Customer acquisition: Find ways to reach new customers with your products and services.
- Product development: Give existing customers more things to buy and attract new customers with new products or services.
- Market development: Break into a new geographical area or a new demographic group.
- Diversification: Think beyond your small business’s traditional products, services, and target audience, to generate entirely new revenue streams.
When is the right time to expand your business?
The right time to grow your small business is as distinct as the business itself. As a small business owner, you might use the following indicators to determine if you’re ready to shift into growth mode: healthy cash flow, growth-ready market conditions, and access to needed funding.
Measuring these indicators can prove challenging, but many tools are available to help. The Business Blueprint dashboard, for example, can help a small business manage their cash flow and make more confident financial decisions. For tapping into needed financing, growing small businesses have many options, including the American Express®Business Line of Credit, which offers flexible access to funding (subject to eligibility requirements, application, and approval).
The material made available for you on this website is for informational purposes only and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.
