In my 10 years working as a Small Business Coach and Consultant, I’ve identified 5 questions that all business owners must be able to answer if they want to get more clients and increase their revenue. I think you’ll find that these ideas are very much a part of the day-today operations of your business.
1. Do you want to increase your revenue?
Sounds obvious, but it’s not. Making more money is what every business owner wants to do. But if you don’t set a specific amount, how do you know if it makes sense. In other words, how can you arrive at a number if you don’t understand the implications OF that number? For any business to grow, it must have the capacity. This means having the needed resources – personnel, equipment, inventory, etc. that you will need to produce more products or provide more services. You may not be able to make these investments.
The point? Setting a revenue goal is a valid exercise, but it must it be achievable
and realistic. And the only way you can determine that is by examining your business model.
2. Does your business model get you there?
Your business model is how you sell and set the prices for your product or service. This means what you give in exchange for what the customer pays, and at what price. There are many kinds of business models; some are designed to make it easy for a customer to buy, i.e. easy credit terms, or the opposite – where payment must be made in full to the vendor BEFORE the customer gets the product or service. The choice you make can have a big impact on being able to pay your bills; the longer you give customers to pay, then the longer you must wait until you get the cash from the sale. This is the basic meaning of “cash flow.” Without a predictable and regular flow of funds, you run the risk of not being able to meet your obligations.
3. How did you decide which “packages” of your products or services to offer your customers?
This question is tied to question number two. Packages means the way you organize and sell your services or products. For example, you could offer to sell your powder cleanser in only groups of four cans – like Costco or any warehouse-type store does, or a lawyer could choose to only work with clients by the hour, as opposed to a set price for each kind of service they offer.
Why chose one over the other? Each communicates a different message to prospective clients, AND each affects how much and when you get paid. In the end, as you consider which approach to take, you must balance your desire to generate as much money as possible while – at same time – being attractive to new clients.
4. How do you decide which markets you’ll approach?
Everyone you can think of? The ones your competition is going for? I’d say NO to both. Who makes the most attractive customers? It’s those people or businesses who need or want what you have to offer. But how do you determine need or desire?
People’s values lay a big role in what they decided to spend their money on. Decisions are also made based on the specific qualities of your product or service, often referred to as your Unique Competitive Advantage. It’s the one thing that you do differently and/or better than your competition., which offers buyers greater value and enables you to justify higher prices.
It’s a big deal because it answers the question, “So what? ” Or what is the benefit to the customer, which is essential to convince someone to do business with you.
5. How much time does it take from first meeting a prospect to getting him or her to agree to work with you?
This is known as your conversion rate. It’s the amount of time you typically spend between the initial contact with a prospect and getting a signed agreement. If the conversion rate is a few days, say for someone ordering office supplies from Staples, then Staples gets the money that it’s owed very quickly, which is good for having enough funds to pay its bills.
But if the conversion rate for business consulting services, for example, is two months, then the consultant must invest much more time before he or she gets the money they are owed. This is important because the rate determines how well your business runs. This same consultant has many expenses that they MUST pay to keep their business running. If it cannot meet its obligations by not having enough CASH, it will soon be out of business. Back to the conversion rate; it is this very turn-around time that dictates when the needed funds will be available.
Challenging Questions? Yes.
If you want your business to grow,
I advise you to have answers.
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