Often when people hear the phrase “grow your business”, they assume it means making it bigger by expanding to new locations – get into new markets and more customers will come, leading to increased profits. Simple, right?
As many small business owners know, however, it’s really not that straightforward. For them, the term ‘growth’ does not necessarily conjure up images of new stores or office branches; rather, it refers to the fact that it’s time to start at the strategizing stage, to analyze and think about what the best approach is for them to start increasing profits without going the knee-jerk route of expansion.
An article that was posted on Small Business BC this past March, called Growing Your Business Smarter (Not Larger), offers some tips on this, focusing on performing proper analysis in order to understand your options for growth. Here’s a look at one of their tips:
2. Consider New Pricing
You may be able to grow your business without any financing at all by simply increasing your prices. While this action could result in a few lost customers, a price increase on your well-differentiated product or service will help compensate for a smaller client base.
You may even be relieved to find out that a price increase scarcely drives any business away at all. If people love what you offer, they are probably willing to pay a little bit more for it, especially if you support this change with marketing activities.
If you have a service business, you might consider repackaging your services or increasing your hourly rate to grow revenues. Usually, there are no direct costs involved with implementing these changes – it just takes time and careful consideration.
Small business owners for whom expansion may not be necessary or financially viable might find this to be a good alternative. When the time is right, a price increase may be your best option. As the article says, however, it doesn’t need to be done across the board – just on those products or services that other companies in your industry may not offer; the ones that make you stand out.
Although many small business owners may immediately consider expansion when the thought of growth comes up, it is, by and large, not the only option. In many cases it can be overly ambitious, as it may be soon and, for the moment, too costly to do, but there are several other methods that can be utilized in order to increase profits. The article at Small Business BC does a great job of getting the ball rolling on some, so give it a read if you’ve got the time and see if it strikes any chords.
Have you considered expanding your business? What routes have you thought of taking? Did you find the ones suggested in this article helpful? Let us know!