A new year means new opportunities for your small business. Start planning with these top business growth strategies for 2020.
The final rush of the year usually means many small and medium-sized business owners are focused on hitting sales targets, ensuring contracts are fulfilled and that staff will help make it through the holiday rush. But this time of year, you’re likely also trying to plan for the year ahead.
Developing a business growth strategy for a new year can be a daunting task filled with uncertainty. Business owners may even forgo planning and stick with the status quo. But some careful planning can unveil areas of opportunity, expose unnecessary expenses and set up their business so it can withstand anything the economy throws at it.
Whether you’re hoping to hold steady or expand your business next year, here are some of our top business growth strategies that you should keep in mind as you forge ahead.
1. Create a business budget
A business budget helps you allocate resources, control costs, set prices, plan for expansion and, generally speaking, make better decisions for your SMB. It’ll keep you on track for a positive, successful year, while also giving you performance information about your business. You’ll know, at a glance, how well you’re doing by comparing your numbers to your forecasted budget. (Plus, if you ever need to secure funding, you’ll need to create one to show the lender.)
2. Have an emergency fund
This is a classic piece of advice, but a good one for any business to follow. An emergency fund helps you deal with unexpected costs whenever they may arise and can get your SMB back in action right away. Start building your emergency fund into your financial planning now and redirect some of your income into it today. Your business will thank you later.
3. Reduce long-term costs
Instead of just looking at ways to reduce your “regular” fixed costs such as the electric bill for your office, how about looking at your long-term fixed costs? These are things like software subscriptions and year-long leases or agreements.
By switching from a long-term to a short-term agreement or subscription, you’ll enjoy more flexibility. Yes, you’ll sacrifice some of your profits to pay the higher rate, but you’ll feel better knowing you can scale down your fixed costs whenever you need to. That peace of mind might outweigh the additional cost.
4. Reduce uncollected revenues
In the enterprise world, interest and late fees are the norm. Vendors and customers who run afoul of payment dates are penalized appropriately. SMBs, however, may be hesitant to do this for fear of offending and losing their customers. But when a customer is late paying you, you’re essentially lending them money, which can have a wide range of negative impacts on your financials. So consider offsetting your losses from late-paying customers by charging penalty fees.
Want to get ahead of late-paying customers and accounts receivable challenges? Consider factoring your invoices to get more working capital upfront. Here’s how it works.
5. Understand your winners and losers
That is, your product winners and losers. Chances are you probably have a few that offer high returns and great value to your customers. Investing in these can bring higher profits. On the flip side, you’ve probably got other products that aren’t performing to expectations. It can be a hard call to retire those, but once you realize you’re spending far more on development, production and marketing than you’re receiving in revenue, it’s much easier to do.
6. Encourage customers to buy during your slow times
Every business experiences slow periods throughout the year, and when nobody’s buying, you’ll need a proactive plan to incentivize your customers. Brainstorm ideas on how your products can provide great value and then market them appropriately. You could use the same strategies to market your existing products year-round (like a “Christmas in July” promotion), or offering complementary services to your business. For example, if you’re a landscaper, offer snow plowing in the winter. Or if you’re a manufacturer, offer a Spring Super Savings discount to preferred customers who haven’t yet placed orders.
7. Eliminate unprofitable clients
Stop working with slow or late-paying customers and you’ll immediately save money. By freeing up time to work with higher-paying customers, it can lead to more income. The key is to focus on customers who deliver greater profitability for your business and eliminating the ones who don’t. Review your customer roster regularly and trim the lower-value customers as needed.
With a few financial tweaks, your business can be set for success in 2020.
Using these business growth strategies can help you reduce expenses, save time and, most important, improve your overall financial health. Find out more about how we can help.
About Liquid Capital
At Liquid Capital, we understand what it takes for small, medium, and emerging mid-market businesses to succeed – because we’re business people ourselves. Our company is built on a network of locally owned and operated Principal Offices, so whenever you’re talking to Liquid Capital you’re talking directly to your funding source and a fellow business person.