Wednesday, September 10, 2014

How do you increase revenue for your small business?

You have been reading about how to improve your small business by working on it instead of in it so you are setting goals for next year.  Great-make sure they are specific enough to guide you properly.  You decide to improve your business by increasing sales by $100,000.  That is specific enough, so the next question is how are you going to do this?

You can increase sales by increasing the price of the products or services you sell or you can do it by increasing the number you sell or a combination of both.  If you are going to do it by selling more, you need to know how many you need to sell to achieve the $100,000 increase you are seeking.  How do you achieve that?

To know how many you need to sell, you need to know how what your average sale is: how much does your average customer purchase from you?  Once you determine how many sales you need to achieve the revenue growth you desire, you need to know how many proposals you need to provide to achieve the sales you need.  If proposals aren't relevant to your business, you need to know how many people need to come into the store before one buys from you.  We call this your close rate as no business sells to every person they meet or who come into the store.

So to improve the profitability of your small business, set a specific goal and determine how you will achieve this goal.  If you follow the process described above, you can tell your friends and family you are tracking metrics and using goal setting to improve your bottom line.  Sounds impressive, doesn't it?  All you had to do is track some numbers and make some calculations-not that complicated!

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