For a lot of clients, particularly those with smaller and younger (in age) businesses, there is an important change in mindset required.
How do you respond if someone asks, ‘what do you do?’
Do you say, ‘I’m a plumber’ or ‘I’m a hairdresser’?
Or do you say, ‘I’m a business owner who owns a hairdressing salon’.
The distinction is critical. A plumber installs pipes. A hairdresser cuts hair. A business owner focuses on the challenges of their businesses and how to grow that business profitably.
Thinking as a ‘owner’ is a big change and one that many small business owners know intuitively that they need but don’t know how to make it. A cash-generating and profitable business has loyal engaged clients, high-performing staff and a management team focused on developing and implementing a growth strategy.
Let’s have a look at the key pieces of the profitable growth puzzle, starting with finding the right customers.
We talked in a previous blog about differentiating your products and services. This process is about establishing what sort of client derives the most value from what you do. You need to be very specific about who that customer is. Depending on the type of your business, defining your ideal customer follows very different thought processes.
If you are selling directly to consumers, it would be very much about social characteristics (age, gender, income bracket, for example). If your business sells goods or services to other businesses, you carefully select industries and characteristics that define the ideal business (revenue size and ownership structure are common). This exercise is called defining your Ideal Client (or Customer) Profile or ICP.
The next piece is to position your products and services to suit your ICP.
Once you have defined your ICP, you need to make sure that your products or services are appealing to that ICP. You’ve already gone through the process of differentiation. But now you need to assess your products or services in light of your ICP. What aspects of that differentiation will resonate with members of the ICP? Imagine you are in your customers’ shoes. Are your products are required, necessary and useful? If they are, great! If you have doubts or concerns, you need to reposition your product set or redesign your services to suit your ICP.
People often fall into the trap of describing the features of what they do, not the benefits. Remember, it is about the client and their needs. You need to describe how the product addresses the client’s problem and the benefits the client will achieve.
The final piece of the profitable growth puzzle is what we at Acuity call ‘distribution’.
Distribution is the best way to get your message into your potential market. That market is all the people who fit inside your ICP. Armed with your ICP, you can set about building an audience.
In a business that sells primarily to consumers (B2C), you would typically take the social characteristics to a platform like Facebook, Google, the local newspaper or radio. This is where your audience is found. For businesses that sell to other businesses (B2B) and professional services firms, the best type growth is from referral relationships. Outside of referrals, you need to build a list of businesses that match your ICP with research and hard work. Yes, Google becomes a very good friend.
Once you have built your audience, you need to educate them on the benefits your product or services bring. You also need to advertise – literally for B2C and the marketing equivalent for B2B known as ‘outreach’ – to them in order to prompt them to buy.
How does this make your business more profitable?
If your business is mostly servicing clients who appreciate your products or services, you can focus on enhancing your products or services, not managing complaints or concerns. You will also get more referral and repeat business. That makes the money you spend on advertising more cost effective. And, unsurprisingly, working with the right kinds of clients will positively impact your and your staff’s approach to business.
Undertaking the process outlined here will give your business a quick win. ‘Quick’ in these circumstances means about 12 months. You will have clarity about where to focus. You will probably enjoy some wins within that 12-month period. Because you’re not constantly working to put out fires, you will start to have some space and time – a time dividend – to focus on your business’s future:
Have I got a great team delivering to the goals of the business?
Am I focusing enough on ensuring my business strategy is correct and properly implemented?
Are my products and services delivering genuine value to my customers/clients’ changing needs?
You got into business for flexibility and choices. As such, you may choose to invest some of that time dividend to take a guilt-free holiday with your family or spend more time pursuing your passions. In other words, doing the things you dreamt you would be doing when you first started your business.