Has your business ever stalled out and simply stopped growing?
It happened to me. Early on in my career as an entrepreneur, I couldn’t figure out why everything stalled. But lucky for me, I didn’t quit there. I kept working, changed my business, and now -- having worked with thousands of business owners -- I have discovered that the primary reasons a business stops growing tend to land into a handful of categories.
1. Lack of opportunity
Some businesses just aren’t made to scale up. When I first started in the dry-cleaning delivery niche, I didn’t understand this simple fact: Business in my little area was never going to be a million-dollar business, let alone a multimillion-dollar business, no matter how hard I worked. Make sure you aren’t trying to win the Super Bowl with a peewee football team.
On a side note, when I make this argument, sometimes people argue the point. For example, they may tell me I could have expanded into other areas or franchised. Of course, I’m not saying there aren’t ways to scale a business, but some businesses are simply easier and less risky to scale than others. If you are in an industry that is challenging to scale, one where your risk of failure is super high, it may be a good idea to start looking into other opportunities.
It’s amazing how many of us get bored. We get bored with our marketing, with our product, with our niche. Our boredom causes us to cancel marketing, taking our eye off the main business to focus on some new exciting startup we want to work on.
Want to sell and jump into a new exciting niche where every prospect only says yes and sales come easily? I get it. I’m not immune to those feelings. But, making changes because we are bored is insanity! If you have an ATM machine that spits out hundred-dollar bills, why would you try to rewire it? This is what people do with their marketing or when they take focus off the main cash cow business. I can’t tell you how many times I’ve heard someone say they are stopping what’s working because they want to try something new. It’s just crazy.
If you read the crap that comes from some marketers, you’d think that everyone was making money easily, using only the internet with no problems, no skills and no employees. While I do know people I could describe that way who are making money, this is the exception and not the rule. It would be like me pointing to a group of billionaires and selling thousands of products with the premise being: “Just buy this product and you too can be a billionaire.”
In almost all businesses it takes employees (or at least outsourced labor) to grow. If you’ve stalled, it may be because you need to invest in another employee or two to kick-start the growth. I get it, when you invest in employees, payroll is bloated, short-term profits go down, and it is risky. But guess what? You’re a business owner -- that’s the job. And 99.99 percent of businesses need employees to make money.
4. Too externally focused
As I write this, I’m in the middle of planning next year’s marketing strategy. I will have a number of new and exciting items on the list (external stuff), but one of the most interesting numbers I’m working on is a plan for our sales call conversion rate. With no increases in the number of calls next year, a 5 percent increase in conversion would equal an additional $1.152 milion in annual revenue. That is an internal number worth focusing on.
I’ll also be looking at how to reduce customer churn, improve employee performance and increase referrals. Just focusing on internal opportunities, we have the potential to add millions in new revenue and/or cost reductions due to improved performance, which leads to increased margins. If you’re not thinking about ways to work on these internal opportunities, you’re leaving tons of new revenue and profit on the table.
Growing a business isn’t easy, but it is pretty simple, assuming you have opportunity in the current business model. You just have to be willing to invest. Invest in yourself (your business education), and invest in your company by hiring the right people, focusing on improving your systems and process.
We’ve talked about why businesses stop growing, and the first two points looked at those reasons, but the last two points could easily be turned around and used as the start of a growth strategy.
- Who should you hire right now?
- What internal challenges could you fix that would have an increase on profits?
- Can you do a better job converting prospects into customers?
- How are you doing on upsells?
- What about referrals?
- Do your customers know who you are, what you do, and that you’re still in business? If not, how are you going to change that?
- What is the communication strategy for both prospects and customers?
I could go on, but you get the point.
The decision to grow (or not grow) is yours; you’re armed with the information. Now you just need to take action.