Small businesses are significant players in any economy. For example, the number of registered small businesses surpasses 30 million, or 99.9% of total businesses. Although some small businesses manage to grow and expand, most fold up within the first year of operation.
A worrying 90% of all startups fail. One of the primary reasons for the high failure rate is a lack of cash or funds. You only need to know how to secure funds and build a sustainable revenue generation machine. But, it is worth noting that it is still possible to expand and scale your small business.
First, you should avoid the traps that cause failure. Afterward, adopt strategies that give your business the wings to fly. Below are some tips that can help grow your small business.
1. Seek Working Capital for Expansion
Lack of cash or working capital is the primary cause of small businesses folding up. It accounts for about 40% of business failures. There are two ways to keep your business on optimum cash flow for best performance. They include optimizing revenue generation machines and outside capital.
It is difficult to increase your sales revenue if you don’t have enough capital in the first place. Additionally, traditional lending institutions are not very flexible to small business needs.
For example, you may need an emergency loan to cover an inventory shortage during a demand spike. Traditional lenders take longer to process loans. So, emergencies that need quick fix loans may not be addressed. Small business loans from alternative lenders can come in handy.
They are flexible, unlike traditional lenders. And your business can get the loan faster, even less than 24 hours. In short, it can easily cover your emergencies allowing you to take advantage of arising business opportunities.
Here are some additional loans and funding avenues that you can enjoy from alternative lenders to keep your business afloat and scale:
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Line of credit
A flexible term loan allows you to borrow up to an agreed-upon amount whenever you need it. It’s a perfect way of ensuring your business does not run out of cash flow.
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Equity financing
It involves giving a percentage of ownership of your business to anyone who pumps in substantial cash to boost your working capital.
Having an uninterrupted cash flow will help scale and grow your business.
2. Understand Your Customers’ Needs
Knowing your customers’ needs helps you size the market from one angle. Lack of market need and stiff competition are the second and third most common factors for business failures. Understanding your customers helps tailor products to solve their pain points.
Thus, it is right to pay attention to customer feedback. Do not overlook any negative reviews, especially online reviews. Try and reach out to those with negative reviews. Ask how you can improve the product to be helpful or satisfactory.
If you understand customers’ needs and solve them, they will stick with you. Thus, helping you grow your business. Otherwise, they will seek alternative brands that can solve their problems effectively.
3. Offer Excellent Customer Experience
Knowing your customers also helps customize the customer experience for better satisfaction. You must make sure your customers feel valued. Remember, customers are the real boss; your business can be no more without them.
Besides, every customer has different needs and preferences. Using the information on their preference, you can customize their experience too. For businesses with an online presence, you can use chatbots to further understand customer needs for ultra-personalization of services.
You can also use chatbots to offer excellent and instant customer service. By reducing the response time, you’ll improve engagement and user experience. As a result, your customers will be more satisfied and may refer their friends and family.
A report shows that 40% of shoppers are likely to shop in a store with personalized experience offers. So, personalization should be part of your operations to drive your expansion.
You can build a loyalty program to drive customer retention and referrals. Customer retention is cheaper than acquiring new clients. And about 90% of companies use customer experience to drive retention and referrals.
Hence, you should also concentrate on excellent customer experience for growth.
4. Concentrate on Established Revenue Sources
It is easier to retain existing customers than acquire new ones, as mentioned above. Hence, concentrating on well-established revenue sources can save you on costs. Besides, it will help raise more funds as repeat customers increase with a better-tailored experience.
Additionally, the referrals will increase along the way. Thus, focusing on established revenue sources can help save your limited resources. It will also drive positive ripple effects to increase your cash flow and ability to scale in the long run.
5. Reduce Your Risk Exposure
The fifth factor that limits business expansion and leads to failures is regulatory challenges. In short, you should have a robust risk management strategy in place. Risk is an inevitable part of any business.
You need a risk appetite to survive in the dynamic business world. But, it should be done cautiously, and cost-benefit analysis should be taken into account.
For example, over 40% of cyber threats affect small and medium enterprises. And strict regulations like the EU’s GDPR can expose you to hefty fines that can derail your growth. Compliance, therefore, becomes necessary to continue with operations.
You can also use regulation technologies that make risk management simpler and relatively inexpensive. Regulation technology will disrupt the traditional risk management that is rigid to the constantly changing regulatory environment.
6. Leverage Social Media to Brand Promotion and Sales Revenue
Here are 4 interesting facts you should know when using social media:
- More than 50% of the world uses social media.
- The average daily usage is more than 2 hours.
- Facebook is leading in the market with over 2 billion active users.
- More than 60% interact with brands through social media.
Hence, using it can increase brand promotion and awareness to drive growth. Leverage social media for business intelligence and maximize its ROI to your brand. You can use social media to test various ads and their formats with different audiences. The most impactful formats should be adopted for wide distribution.
Additionally, you can track your paid and organic social media campaigns to determine ROI. It will give you the lifetime value of customers and the sustainability of your operations.
7. Know Your Competitors
20% of businesses fail to grow and eventually fail due to stiff competition. Hence, understanding your rivals is vital. You can use the below competitive research tips to gain visibility into the market and rivals:
- Understand your niche market
- Know the reasons behind consumer purchases and adjust your marketing campaigns accordingly.
- Use SWOT analysis to uncover insights into market gaps worth exploiting.
- Know your competitors from pricing, products, marketing, social media, etc, and adjust accordingly.
- Continuously identify areas for improvement.
Take Away
Running a small business is tough, especially with cut-throat competition and a tight budget. You may face many hurdles that can lead to your downfall.
But, there are ways of driving sustainable growth. You should have reliable and flexible capital funding and a better customer experience. But, ensure you understand the market, user needs, and regulatory environment.
We hope the above tips will help you scale in your niche market.
After reading this article on Small Business Tips to Help You Grow, you should have generated some new concepts. On this page, you’ll find more suggestions: 8 Apps Which Can Be Helpful for Employee Management
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