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Last Updated:
Tuesday August 10, 2010
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No matter how many years of continuous
growth a business may have, we have yet to hear the entrepreneur/owner say
that he didn’t want his business to grow. He does.
There are several reasons for this:
-
Customers move from the
area, retire, are attracted to your competition, close or sell their
business: and yours decreases
-
Without new customers
presenting new challenges, you become stale and complacent
-
Growth gives your good
young talent the opportunity to move up the ranks, or you lose them and
the time and effort you devoted to developing their skills. You then have
to begin the development process over again at an unnecessary cost.
-
New growth, when properly
managed, reduces unit cost, with a resulting increase in bottom line
profits.
Here then are the 4 ways to Build a Better Business:
1.
Increase the number of customers you serve
2.
Increase the number of times they come back (or refer
others)
3.
Increase the average value of each sale
4. Increase
the effectiveness ( with which we do all these other things)
Let’s look at what’s possible:
Now: you have 10 customers x 10 visits x
$10 average sale = $1,000 gross sales
Assume you are able to increase each
factor by 10%. You then have – 11 customers x 11 visits x $11 average sale
= $1,331 gross sales
So, therefore, a 10% improvement in
each of the Critical Success Factors will result in a 33% increase
in Gross Sales.
There are a great many techniques to
increase the 4 Factors. Here is just one possibility for each Factor:
Increase the number of customers
you serve by establishing Host-Beneficiary
Relationships with non-competing businesses who serve your target market.
Such as a carpet retailer setting up a reciprocal relationship with real
estate agents.
Increase the number of times they
come back by giving random rewards to beget
regular behavior. Such as an airline preferred customer program to
increase the repeat factor.
Increase the average amount of
each sale by establishing value to
customers. Such as setting up a phone conversion process that educates
customers.
Increase the effectiveness
by identifying Key Performance Indicators. Such
as identifying every customer interactions in the client cycle and then
developing performance standards for client satisfaction for each contact.
If these concepts make you aware of the
possibilities that exist for building your business, contact us. Your first
visit with us may be the most important . . . and it’s our gift to you.
Lawrence L. Richards, C.P.A.
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A CPA and accounting firm serving Encino, Los Angeles and most surrounding Southern California communities:
Canoga Park, North Hills, North
Hollywood, Northridge, Panorama City, Reseda, Sherman Oaks, Studio City, Valley
Village, Van Nuys, Winnetka and Woodland Hills
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used, for the purpose of (1) avoiding tax-related penalties under the Internal
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taxpayer may rely on professional advice to avoid federal tax penalties only if
that advice is reflected in a comprehensive tax opinion that conforms to
stringent requirements under federal law.
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