More simple stuff that works! (Episode 2 of the Four Ways to grow a Business)
In my last article, I proposed that there are only 4 ways to grow a business:
- Find more customers (but, very importantly, of the right type)
- Do business with your customers more frequently
- Increase the value of the average sale
- Increase the efficiency of what you do in the business
I had no takers for the Champagne challenge, so either agreement or apathy is evident.
We dealt with number 4 last time, now we’ll have a look at number 1 Finding more customers (of the right type).
It’s a “no brainer” that more profits are likely to be earned if you have more customers, but remember the Pareto principle – the 80:20 rule.
It’s amazing how this works. Does it ring any bells that you get 80% of your day to day hassle from 20% of your customers or 80% of your profits from 20% of your customers? Some customers are “right” and some are “wrong” – we need more of the right ones.
Interestingly, some businesses are over-stretched, even in these troubled times – why give your valuable resources to the “wrong” customers? I’ll be even more controversial – why not sack them?
Some organisations, particularly whose which are managed by salesmen, are incredibly focussed on attracting sales at any cost. For example, Cobra Beer, which went bust owing £70 million, never made a profit during the life of the business!
Lord Bilimoria admitted that his focus had been “on the top line rather than profitability”.
The answer is, firstly to make sure you know which customers are “right” for you, and then focus your marketing activities on attracting them.
Unless it is obvious, identifying the “right” customers might require some research, perhaps an analysis of your sales system to work out statistics on minimum order quantities, geographical location, or products purchased – whatever combination leads to a profitable sale.
For all of you who are reading this and thinking “Get real – any customer is right for me!” I sympathise and we’ll move on next time to other ways of generating more profits.
Alan Suggett is Business Services partner at unw and can be contacted by telephone (0191 243 6009) or e-mail (alansuggett@unw.co.uk)
Other 2009 news
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New arrivals hit the mark
2009 has seen the arrival of several new members to the team with specific individuals arriving to add to our sphere of expertise across all sectors of the firm.
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15% VAT rate extended for New Year's Eve traders
Pubs, clubs, restaurants and other retail businesses remaining open past midnight on New Year's Eve will be allowed to continue charging VAT at 15% on their sales until they close or until 6am on 1 January 2010, whichever is the earlier, the Financia
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2009 Charity update
unw Charity Group continues to flourish and met on 4 occasions during 2009.
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More Simple stuff that works! (Episode 3 of the Four Ways to grow a Business)
I issued a Champagne challenge for someone to prove me wrong by finding a 5th way and still have had no takers! We previously dealt with numbers 1 and 4, so now we’ll have a look at number 2.
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More simple stuff that works! (Episode 2 of the Four Ways to grow a Business)
In my last article, I proposed that there are only 4 ways to grow a business:
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Senior Appointment at unw
unw is delighted to announce the appointment of Michael Morris as partner in the firm’s Audit and Assurance Department. This will further strengthen the expertise within the team as unw’s client base continues to grow. Recent client wins at unw in
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Simple stuff that works!
How can my business grow, or even survive, in these troubled times?
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Alan Suggett Appointment
Alan joins unw on 1 April 2009 from Baker Tilly Newcastle where he was the partner in charge of the Accounting Services department. Before that he co-lead a management buyout of most of the former Binder Hamlyn office from Andersens to form the indep
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Mark Hetherington: New VAT partner at unw
unw chartered accountants have recently enhanced the service offering to their clients with the arrival of Mark Hetherington as a specialist VAT partner
