As a small business owner, you’re always looking to bring in more money, as your revenue is the lifeline of your business. If you’re not making money, you can’t hire staff, nor can you take your business to the next level. Fortunately, many small business owners before you have been able to grow their small businesses into big ones.
We will look at how you can turn your small company into a million-dollar business, with three steps provided by Jeff Rose, CFP and founder of GoodFinancialCents.com.
Step 1: Identify Opportunities
Before you can increase your revenue and grow your business, you have to figure out how you will do this.
How do you identify opportunities? Here are a few starting points:
- Extensive market research
- Ask for customer feedback
- Study your competitors
- Considering niching down
- Validate your ideas with prototypes and beta testing
Before you can reach the million-dollar mark, you must know what your small business will focus on. You may have to attempt to reach a new market or introduce a new product offering to your current market. It’s important that you complete this step before you move on to the next one.
Step 2: Build a Strong Foundation
The next step is to build a strong foundation for your small business before you can take it to the next level. There are three aspects to this: getting the right financing, building a strong team and optimizing your business finances.
Getting the Right Financing
How will you try to grow the business? To take your company to the next level, you will have to spend some money.
What are the options for financing?
- Business loan
- Venture capital
Sometimes a cash injection is what you need to invest in the right resources to grow your business. The funding source will depend on the type of business you’re in.
Building a Strong Team
Do you have the right people in the correct roles in your small business? This may require you to spend some money up front to get the necessary systems in place so you have your accounting, marketing and customer service departments figured out.
For this business to hit the million-dollar level, you need the right team. This means you will have to outsource tasks that you’re not proficient with and spend the money on bringing in the right team members for each role.
Optimizing the Finances/Revenue
As a small business owner, you must figure out which products are driving revenue and which aren’t worth it any longer. You also have to know where the money’s coming from and where it’s going on a grand scale. This leads us to two critical questions for all small business owners looking to grow million-dollar companies.
Are you tracking your revenue?
Many entrepreneurs struggle with tracking revenue and cash outflows. You have to determine which products and services generate the most revenue. Then you have to decide which products to cut, which products to invest more resources into, and the type of new products that you have to introduce to your offering.
Some difficult decisions may have to be made at this stage because you may have to cut out a product you’re attached to. You may also have to add a new product or a higher tier requiring you to charge more.
What’s your profit margin like?
As a creative type, this accounting side of running a business doesn’t always come naturally. You want to get an accounting system to take care of this. You also want to look through these figures to see whether you have any leaks in your business. There could be areas where you’re spending too much money and it’s preventing you from getting to the million-dollar level. You may discover that you’re spending too much money on advertising a product that isn’t bringing revenue or that your lack of customer service costs you clients.
As your business grows, you have to manage your expenses because there’s no point in having a million-dollar business if your spending inflates to the point that you can’t turn a decent profit.
Step 3: Scale Effectively
As a small business owner, it can be tempting to work in your business instead of working on your business. You can easily watch the days slip away as you get caught up with busy work that won’t move the company forward since it feels like you must constantly be putting out fires. The final step in taking your company to the million-dollar level involves scaling effectively so your business has the space to grow.
What are some of the things that you should focus on with your business to scale it to the next level?
- Lead generation. You have to find new clients if you want to grow your business. This means you should invest in marketing systems to help you generate new leads.
- Improving your customer service experience. You want to get everything to offer excellent customer service so your current customers become your best referrals for future business.
- Introducing new product offerings. To get to the next level, you will have to introduce products and services at a higher pricing tier to increase the revenue. In order to do this, you have to complete the previous steps first so you don’t invest valuable resources into the wrong products.
The goal for every small business is to improve that bottom line. You can focus on identifying opportunities and building a strong foundation to help you scale your business and maximize your revenue until your small company becomes a million-dollar business. It won’t always be a simple journey, but it’s worth giving it your all to try to get there.