According to a May 2014 Gallup survey of U.S. small-business owners, securing accounts/generating revenue was identified as the most important challenge facing small businesses today. Rounding out the top three challenges were the related items of cash flow and the availability of credit.
While sales growth has always been a priority for small and medium-sized businesses, the recent combination of economic, technological and demographic factors has hit many businesses where it hurts: right in the sales pocketbook.
To thrive in this environment, your mantra needs to be “more sales.”
The economy has been recovering slowly since 2009, with Canadian gross domestic product increasing by 1.7% in 2013, compared with 3.1% in the U.S. The Great Recession also changed many consumption patterns, and the insatiable government demand for more tax revenue is adding to business costs while making it harder for consumers to expand discretionary spending. Technologically, e-commerce sales continue to grow significantly, approximately 16% per year, and m-commerce (mobile e-commerce) is on track for a 28% annual growth, creating more online sales opportunity.
Finally, demographics continue to play a large role as baby boomers scale back spending to compensate for investment losses since 2009 and in preparation for pending retirements. Meanwhile, millennials (age 18 to 34) make up 27% of the adult population today compared with baby boomers at 32%, but will bypass baby boomers by 2020 and be 36% of the adult population. This will change many facets of business, with new trends emerging, such as a sharing economy. These, and other factors like globalization, continue to put significant pressure on small businesses to achieve top-line revenue growth.
If you choose more sales as a mantra, it’s best to start with the basics. Don’t overreact and put your existing base at risk, but get the sales fundamentals right and build from there. Remember there are really only three ways to grow sales: sell more to your existing customers, cross-sell to your existing customers and sell to new customers.
First, ensure your current customers are well served. If you take them for granted, they will be taken from you. It is always more expensive to acquire new customers than to maintain your current customers. Find ways to sell them more by building trusted relationships and understanding their evolving pain points. Build a customer community. Remember there is a big difference between selling and closing, so don’t forget to ask for the money.
Secondly, start cross-selling additional products or services to existing customers. Be respectful of the relationship and don’t get too aggressive and risk the base. Develop new products by leveraging your current portfolio. This will be a lower-cost, faster method to access the market and increase sales. Prototype or test concepts with loyal customers/prospects and incorporate the feedback. Ensure your sales infrastructure is solid, including exceptional sales professionals, effective sales process, customer relationship management technology, key metrics, operational systems and financial controls.
Finally, with this stronger base of customers and products, branch out to new customers. Leverage referrals, your brand and sector knowledge. Review your strategic mergers-and-acquisitions growth options. Operate from a strong base, iterate products, expand sales channels and, of course, build a strong e-commerce platform. If you are the CEO, you should be spending 50% of your time on sales, perhaps a little less if you are more established and substantially more if you are a startup.
Like any mantra, more sales will bring you inner peace and inspiration. More importantly, it will bring focus and ultimately drive the business factors that really make a difference to your customer: exceptional service, innovative products, competitive pricing and value.
Eamonn Percy (www.percygroup.ca) is the principal of the Percy Group, a business advisory and capital firm focused on helping business leaders of mid-sized companies accelerate sales and profit growth.