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In today's show, I gave you:

• An idea to help your business to grow - How do you grow your company incrementally?


• A review of this podcast
  
  My goal is to give you insight into how to grow your small business.
  
  The two-part process I follow gives you
  a) an idea that other SMEs have used to grow their business
  b) an interview with an entrepreneur to hear who they are, where they have come from, what they are doing with their business and their growth intentions.
  
  I also ran through the topics I have covered and the people I have spoken to

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How do you grow your company incrementally?

I work as a business coach, helping small businesses to grow so I enjoy meeting entrepreneurs who want to increase their company size. When I met Michael recently, I was happy to tell him that there are only three ways in which he can build his business:

• Increase the number of clients.


• Increase the average sale value to each client.


• Increase the number of times clients return and buy again.

Of course, there is a gap between knowing this fact and actually achieving it. That is where the business coach comes in.

Knowing your numbers

The first step was for Michael to calculate his baseline figures:

1. Calculate the number of clients that bought his services in the past 12 months.
2. Work out the average amount these clients spent on each transaction.
3. Determine how often these clients made a purchase in the year.

Michael runs a photocopy and art ware shop. So his electronic till system told him he had 3,400 receipts in the past 12 months, with an average £10 for each till receipt.

He also has a customer loyalty scheme so he was able to break down his client list to show that the 3,400 receipts represented 2,100 customers, ranging from one to nine purchases in the year, with an average of about three purchases in a year.

So 2100 Customers x £10 each receipt x 3 times a year = £63,000

Incrementing your numbers

The next step was to help Michael to recognise the power of incrementing his numbers:

• If he can get a 10% increase any factor, his revenue will grow by 10%.


• If he can increase two factors by 10% each, that is 21% revenue growth.


• If he can increase all the factors by 10%, his revenue growth will be 33%.

So we are looking at the costs of making these increases.

Getting more customers

Michael drew up a list of ways to increase his customer base:

• putting more advertising in local papers;


• leafleting the homes and businesses in his town;


• turning his delivery van into a mobile advert;


• putting an A board outside his shop; and


• updating his shop window display.

When he has costed each of these actions, we will rate what response we think each will produce and decide what actions he wants to take.

Increasing transaction sizes

Michael was stuck for ideas to increase the average size of each sale. So I started to coach him on what each sale comprises. Well he knew the basic component is the item that the customer has come to the shop for – predominantly photocopying.

So we examined the till record to see what patterns there were in the multiple purchases, then we developed a list of more than 20 popular ‘shopping baskets’. We brain stormed why his customers would have bought those particular combinations and then we hypothesised the customer’s needs that lay behind each ‘shopping basket’.

Suddenly Michael could see some meaning in his data. So the next step of knowing how to increase his receipts became easy – he had to find out which pattern each customer falls into and then encourage them to buy the combinations of goods and services that they are interested in. Knowing what his customers want to buy, he can easily to cross sell and add value to their basket before they check it out.

So he is optimistic that a 20% growth is possible though I have encouraged him to start with a more realistic 10%.

Boosting resale frequency

In some ways, Michael has already made a good progress with repeat sales. His customer loyalty scheme is quite effective with 25% of his customers being enrolled, with customers getting a progressive discount on offers according to their spending levels.

So we spend a couple of hours thinking around this factor and came up with some more ideas: by collecting his customers’ email addresses, he could start to entice them to shop more often:

• he might send out a quarterly statement of their purchases, showing their current discount level on the offers for each month;


• he might put out a regular newsletter to educate and interest customers;


• he might link customers to offers that affiliated shops and web sites have; and


• he might put out an annual questionnaire to find out what goods and services his customers would like to buy.

Michael has the email addresses for 25% of his clients who are enrolled in his loyalty scheme so they will be easy to contact and start to work with. He now needs to build his database by asking each customer to opt in to having offers sent to their email address.

We are not sure what percentage these actions will yield but the implementation costs are low so Michael will probably start them all fairly soon.

Letting small actions multiply

This gives you a good overview of where Michael and I have got to. He has a goal, we are working on his achievable action plan and I am coaching him to improve his performance as a retailer. And it is fun.

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Adrian Pepper coaches people through business and personal difficulties, helping company owners and directors figure out what to do, how to move forward and what to get organised.You can contact him at Help 4 You Limited on +44 (0)7773 380133, email adrian@help4you.ltd.uk or through www.help4you.ltd.uk.

This podcast for small businesses is at feeds.feedburner.com/help4you.

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