HOW to Help and Advise Your Business Owner Clients to Grow Their Business
Most of your business owner clients will be working to grow their business revenues and profits – and as their business advisor you can help them by encouraging them to understand that “there are only 4 ways to grow a business”.
This involves some logical thinking with your clients: First you need to help your business owner clients to understand the math:
Revenue is comprised of 3 elements - in every business
1. Number of Customers – on average in any given period
2. Number of Transactions – on average per customer in the same period
3. Average $ Value or Price – per average transaction in the same period
It is a mathematical fact that (for any of your business owner clients in any given period) their Total Revenue = 1 x 2 x 3
If the business can’t grow revenue and it wants to Grow Profits, then the only alternative way to achieve that is to Reduce Costs.
To reduce costs means the business owner either has to improve their gross margin by taking out cost (at delivery) or reduce their overheads. Either way they have to Get More Efficient.
Consequently there are Only 4 ways to Grow a Business as shown below:
1. Win New Customers – of the “right type”
2. More Transactions - with existing customers
3. Increase Average $ Value – per average customer transaction
4. Increase Efficiency – reduce costs (margin or overheads)
Rank your strategic growth focus in priority order
It’s a good strategic discipline for business owners to decide – where it would be easiest to start the growth process – and then rank the above in 1-2-3-4 order of priority – before creating a plan.
Focus on the HOW? Create a Plan
1. Planning Focus - Win New Customers
The business owner can only achieve this in 2 ways:
- Organic Approach – to win new customers
- Business Acquisition – to “buy new customers”
Generally the advisor will discover that the answer for most of their business owner clients will be the organic approach – in which case their key focal points of attack will be:
- Targets – who are the “right type”? Properly define.
- Value Proposition – what do we say to win work? Consistently demonstrate.
- Reach – how will we approach the targets? Marketing “tool bag” reflect value proposition and aligned?
- Evaluation – how we make it easy for target customers to evaluate us and close the sale.
2. Planning Focus - More Transactions
The business owner can achieve this in a few ways to include:
- Internal Focus
- Customer Service Process – to increase transactions
- Develop New Products / Services – to increase services available
- Business Acquisition – to “buy new products”
Generally the answer for most businesses will be to concentrate on the internal customer service process (unless they happen to be already developing new products or services) – in which case the key focal points of the plan will be:
- Relationships – how do we use relationships to increase the number of transactions with existing customers?
- Processes – what is our standard process to “up-sell” and “x-sell” to existing customers?
3. Planning Focus - Increase Average $ Value
The business owner can achieve this in a few ways to include:
- Price Increase
- “Up-Selling” Services
Generally the answer for most businesses will be to really concentrate on “up-selling” services – in which case the key focal points of the plan will be:
- Processes – what is our standard process to “up-sell” and “x-sell”?
- Separation – have we properly defined and separated services?
4. Planning Focus - Increase Efficiency
The business owner can achieve this by focusing on the 7 Business Wastes – which are covered in detail in other blogs.
In overview the advisor should encourage their client to think about:
- Waiting – where do “bottlenecks” and delays happen?
- Defects – where do things not go “right first time”?
- Processes – where do we have an inadequate process?
- Over- Engineering – where we “do too much for the money charged”?
- Working capital – where we have too much money tied up?
- Internal flows – where poor movement/ communication happens inside the business (amongst our team)?
- External flows – where poor movement/ communication happens outside the business (vendors / customers)?
By following a logical approach to strategic growth planning you can really help your business owner clients to dramatically increase their chances of driving business growth.
If you are a 21st Century CPA you have a fiduciary duty to help your business owner clients to Maximize Business Potential. You should be encouraging your best clients to follow the principles of “4 Ways to Grow a Business” – and we can show you HOW.