Even if you don't expect your small business to turn you into a millionaire, you still want it to succeed and generate the revenue you need to live a quality life. Because market demands are always changing, regular reevaluation and growth will allow your business to stay relevant and competitive. Don't be blindsided by changes in market trends. Instead, proactively reevaluate your business's performance and encourage a healthy growth rate to stabilize your small business.
When to Apply Re-evaluation and Growth Strategies
Maybe you can already tell your business is booming, so why should you stop to question it? It's important to do more than just ride the wave of success; you should also understand the contributing factors that have caused your sales to increase. Without gathering data and taking a step back to look at the big picture, you won't be able to accurately replicate your success. Find your strengths by re-evaluating your sales data or by comparing your business plan to the reality of your progress.
Other times, you'll find your business had been steadily generating revenue, but the growth rate then stagnated. Even if you are happy with your current monthly revenue, a plateaued growth rate leaves you more vulnerable if a dip in sales does occur in the future. Consider growing your business anyway in order to pad or buffer your revenue. For example, multiple revenue streams will allow your business to still make money even if one of those streams becomes sluggish or tanks completely.
Finally, if your sales numbers suddenly take a nose dive, the future of your business depends on you investigating the problem and fixing it. You don't want to discover this problem too late, so it's vital to develop a routine for analyzing sales trends. If you've already discovered strategies that work well for your business, you can immediately apply them when needed (such as running a sale or emailing special discount codes when your sales slump).
How Often to Reevaluate Your Business
Some days will be more successful than others, so it's best to evaluate trends over time rather than obsessing over short-term performance. A weekly analysis is ideal so that you can notice trends over time while still having the opportunity to act swiftly if needed.
Every Friday, take a look at the last week's sales numbers and jot down some observations about why things went so well or so poorly. At the end of each month, look back on the entire month's sales trends and make some initial observations. Once you've been in business for longer than a year, you can also begin to compare each period to the same period last year to notice seasonal trends.
Finding Out Why
To find out why your business is performing the way it is, it's vital to get multiple perspectives from your employees if possible. Start by asking for observations. Maybe one of your employees knows that there was a national conference held just down the street, which could explain the increase in foot traffic and sales that your business enjoyed during that same time. Be careful to avoid confusing correlation with causation when evaluating observations, however.
Next, look at data related to your current marketing efforts. Did one of your blog posts suddenly go viral? Did that pay-per-click ad have the wrong target audience? Try to work your way backward, tracing the traffic to its original source (Google Analytics and other analytics software can help) to pinpoint exactly what happened and why.
Finally, do some competitor research to find out if everyone in your niche is currently experiencing the same phenomenon. This could indicate that your product or service is going out of style or that the market has become saturated. Look at the stock market as well to gain some perspective about your industry's performance.
What Does Growth Look Like?
Now that you know what's been working well for your company and have identified potential opportunities, it's time to develop a new business plan geared toward growth. What does growth look like? Different businesses grow in different ways, but the bottom line always comes back to revenue. If your profit isn't increasing, your company isn't growing.
One way you can grow your business is to add new revenue streams, such as by offering a subscription service, charging a usage fee or even renting out products in addition to selling them. Think about Costco or Sam's Club, for example — the sale of products is one revenue stream, but store membership (a "subscription") is a second revenue stream.
Your business can also grow by adding new brands to your sales catalog, acquiring a competitor or merging with another company. For small businesses in particular, growth can look a little more modest, such as improving sales through marketing, reducing overhead costs or opening a new location.
Conducting Market Research
Making assumptions (even ones that seem to be backed up by data) and drastic changes could end up costing your business money in the long run if they turn out to be false. Although you do want to make your move at the right time in order to gain a competitive advantage, you also don't want to rush in without considering all your options. Instead, start by developing a hypothesis that explains the cause and effect relationship that you believe influences your revenue. Determine what kind of results will indicate that the hypothesis is valid and then test that hypothesis on a smaller scale before gearing up for some serious business growth.
Inevitably, this means conducting more market research. Before you buy some products from a new brand, develop a subscription program or hire a lawyer to create a contract for renting your products, take the time to conduct surveys. Will your customers even want to buy that new brand, pay for a subscription or rent your products? If the results of your survey seem favorable, run a test launch by offering an optional and low-cost subscription, offering rentals on your most popular items or purchasing a small quantity of a new brand's products to put on the shelf.
In addition to sending out surveys, you can also research case studies of similar companies in the United States to find out what tends to work in your industry and what doesn't. You can find the full text of case studies and working papers on websites like Google Scholar, NCBI, CrossRef, PubMed, NBER and more. Pay particular attention to how a company's strategy affected their average growth. Does their success line up with your goals, or does it fall short?
Testing Your Hypotheses
Market and advertise your new endeavor even at the test stage to get a true feel of how customers respond. If you create a new revenue stream or open a new business location but don't tell anyone about it, of course it will fail — but not necessarily because it was a bad idea. Once you've tested your hypothesis for a couple of months, take a look at your data. Use it to create a projection of what the results would be if you scaled up to more than just a test run and decide if the potential return on investment meets your expectations.
Really Stuck? Hire a Consultant
Growing a business is a lot like starting a business. It can be risky and requires creativity, planning and funding. Sometimes, being so close to your business makes it hard to see the forest for the trees. If you ever feel stuck, hiring a business consultant can give you a fresh perspective and expert advice to help you take a bold step forward.