Let me ask you something… Apart from the dead give-away originating from the title, how many ways do you, or did you, think there was to expand a company? Any business Kingw88
1? 3? 10? 150?
When ever I ask this to a target market I obtain countless individuals yelling out a variety of answers varying from 1 to, well, limitless.
It is real… Individuals actually think there are “limitless” ways to expand a company!
Reality be informed, there are just 3 ways to expand and business.
THREE?! Have you shed your mind?
Nope, and I invite you to challenge that.
There are just THREE ways to expand ANY business.
Here they are:
First, you can increase the quantity of customers you have.
Second, you can increase the dimension of the deal.
And 3rd, you can increase the quantity of deals that occur annually.
When you use stress or concentrate on all 3 of these ways to expand your business, you can expand GEOMETRICALLY, anything is linear and restricting.
Let me discuss…
The unfortunate reality is that most individuals focus primarily on number 1, expanding the customer base, without recognizing that this is without a doubt the slowest, most expensive and time consuming technique there’s, and is very linear.
Often, the cost to constantly obtain new customers is high, and usually does not become incrementally MORE lucrative as business expands because, unless business is under-performing, typically the overhead increases together with with the increase in customers. If you had 10 customers and performing at max capacity, and you include 10 new customers, you need more staff, items, staff, and so on.
Let’s play this out…
Let’s say you had 100 customers, and those 100 customers purchase once annually, and they invest 100 dollars. (Simply to maintain the mathematics easy !)
100 customers x 1 annually x $100 = $ 10 000
So 100 customers invest 100 dollars with you yearly, you are generating 10K.
Currently let’s say you bust your butt and produce a 10% increase in your customer base, so currently you have 110 customers. Of course, for this instance we will presume you didn’t shed any one of those initial 100. (a joke, I know, but that is okay)
Currently your business is doing…
110 customers x $100 x 1 year = $11 000
10% increase right? Appears respectable?
But that is a difficult, slow approach. And expensive. I imply, when your business is new, simply beginning and still in its infantile stages, 10% increase may not appear that difficult, but that is because a brand-new business picks off the easy, reduced dangling fruit. Once all the easy customers have come and (hopefully not all) gone, that is when we find out what it truly cost to generate a brand-new customer.
So generating new customers is without a doubt one of the most expensive technique of development. (and there is absolutely nothing incorrect keeping that…)
But suppose we took that same 10% and used it throughout the board. Suppose you not just enhanced your customer base by 10%, but you included a 10% increase to every deal (you can raise your prices, bundle in related services or product, and so on.). And let’s be honest, most individuals can raise their prices 10%. (more on that particular later)
So currently we have…
110 customers x $110 each, x 1/year = $12 100
That is an extra $2000 a year with no extra initiative.
But let’s take this also further…
Suppose you convinced them to purchase two times a year instead of once annually…
110 customers x $110 each x 2/year = $24 200
Currently we’re talking.
Currently, do not obtain me incorrect, I’m not naive enough to say it is that easy. I obtain that this is simply mathematics and there are a million and one points that could change this formula and it is success. BUT, to discount that most individuals just concentrate on expanding the customer base and absolutely nothing else would certainly be foolish.
Everything boils to what type of lifestyle you want…
If you want to invest daily heading out and obtaining new customers, which makes you happy, go nuts.
Or, if you are such as some of my customers that, perhaps for individual or family time, want to work LESS, there is great deals you can do! For instance, I’ve had customers RAISE their prices by 80, 100, 250% (Yes !), shed fifty percent their customers which means much less overhead, much less work, much less time, and wind up production MORE money.
The beauty of business is that you CAN choose and design life on your terms.
Of course there are a million ways to increase your customer base, there are a million ways to increase the dimension of each deal, there are a million ways to increase the quantity of times they transact business with you, but at completion of the day all business boils to 3 basic points: customers, dimension of purchase, purchases annually.
Plainly, we’re constantly talking average, or also below par numbers to be conservative (it is constantly better to marvel on the benefit not downside), but suppose…
If you own a dining establishment, you have 100 customers spending 50 dollars a dish being available in two times a year… and you obtained those same customers to invest a couple of dollars more each time, or come in 2 extra times?
If you own a physical fitness workshop and you obtained your customers to spend in an included, specialized program and operating it two times annually over their routine subscription.
If you own a hair dresser and your customers come in typically once every 3 months but you obtained them to find in every 2.5 months rather, and upsold them a wash or color or item each time.
If you are an independent sales associate and had 100 customers ordering two times annually, you can invest all the time attempting to obtain new customers, or give your current customers needs to buy 3 times annually.
I could go repeatedly…
Among the easiest points I do when I first come right into a brand-new customers business (and it makes me appear like I’ve obtained some kind of trick) is find ethical needs to have more bucks each deal, and more deals annually.
Remember, 3 ways. 3. Not 5. Not 50. Not 100.
Concentrate on all 3 and expand your business geometrically and you will be well on your way.