Thinking things through
I’ll always be grateful that I trained as a Chartered Accountant, because the qualification rewards you with an invaluable skill set, including the ability to think about problems logically.
Consider, for example, the conundrum of what might comprise a good investment if inflation ever takes off again.
Conventional wisdom says that the stock market is an effective hedge against inflation – and it very often is – but then you need to go a step further to consider which businesses will thrive & become more profitable.
Turnover might increase with inflation, but unless an enterprise can increase its revenue in relation to the assets employed by the business this may not as profitable as it appears, while costs (raw materials, wages, energy costs, administrative expenses etc.) will probably rise too, and that’s before potentially higher debt servicing costs are factored in.
Dividends may lift over time, but these too are effectively taxed by inflation, in addition to any income taxes in the hands of the investor.
Go forth…& multiply!
Income growth is a critical issue causing angst around the developed world at the moment, so today I thought I’d take a look from the perspective of your business at how you can dramatically increase your revenue.
There are really only four ways in which you can boost revenues: get more customers, get ’em to spend more by selling additional products to them (e.g. bundling), get ’em to buy more often, or increase your prices.
Simple stuff, granted, but nevertheless worth a recap, because small business owners often think that competing on price through discounting will help them to grow – yet as the graphic above implies, this might simply be taking you further away from your business goals.
Instead, consider how if you can make marginal gains in each of the four quadrants to make, say, 10-20% improvements, the end result is not a marginal increase in your revenue – instead it’s an absolutely explosive increase because the impacts are multiplied.
5 ways to get more customers
There’s only one ethical way to increase your prices to my mind, and that’s to be the best at what you do, & over-deliver with your customer service every time.
Taking it down a level, then, how can you get more customers or clients?
Here are 5 simple ways:
(i) Ask for referrals – leverage your existing network, with rewards if appropriate, for your own customers can be your best source of referral;
(ii) Consider your ideal client – not many products or businesses appeal to everyone, so work out precisely who your target client is;
(iii) Be a problem solver – specifically what solutions are you providing for your clients? Position yourself as the answer;
(iv) Keep online content fresh – the first interaction you’ll have with many customers today is online, so your content should be professional & current; and
(v) Actually speak to people – a wild & dangerous idea in the modern era, I know! But through networking, meeting with, and speaking to real people…stuff happens. Move in the right circles.
Well, that’s it, very simple for today. Now go forth & multiply your income!