Take Your Business To The Next Level: The Ultimate Guide
Taking your business to the next level is easier said than done. For starters your businesses has actually got to survive in the first place.
8 out of 10 businesses don’t make it past 18 months. If you make it past this point you’re doing well.
The problem is that with a lot of businesses, once they establish themselves, the amazing growth they saw in the first couple of years levels out and it’s hard to push through to the next level.
If you’re struggling to take your business to the next level here are 3 steps you must take to get things moving.
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1. Get investment for your small business
When it comes to kick-starting growth in a business nothing works quite as well as a big injection of cash.
However, while investment can be extremely effective it can also be fraught with risk. Follow these pointers on how to do it properly.
Where to find investors
The first and arguably biggest challenge when it comes to getting investment is where to find investors.
Rather than waiting for your turn on Dragon’s Den, when it comes to finding investors you need to make your own luck.
Friends and family
If you’re just starting your business or it’s in its very early stages you might be better off looking to people you know rather than a traditional investor.
Unless you’re a promising tech start-up it’s pretty unlikely you’ll get a big investment early on. While you can always hope, don’t rely on someone giving you £100K because they think you’re the next Mark Zuckerberg.
If you’re just starting up and simply need a small sum to spend on stock and equipment, asking family and friends can be an excellent first port of call.
Later in a business’s life cycle you’ll need larger sums of money to really push your business to the next level. At that point you might want to look for a traditional investor.
An investor will invest in your business but will expect a return, typically in the form of equity.
A good place to find these investors is within your own industry.
Someone within your industry will understand your company so they can see its value, and they will also provide you with a wealth of industry advice.
People coming to the end of their careers in your industry can be a good choice as not only will they have the money to invest, but they might be more inclined to as it lets them keep one foot in the working world after retirement.
Beyond this you might be able to find investors through networking, whether online or in person.
Some people are self-styled professional investors. If you meet one of these people, even if they won’t invest themselves, they’ll be full of great advice and contacts to get you on your way.
Also, in your quest to find an investor you’ll come across the concept of venture capital firms and strategic investors.
While venture capital of course does provide some businesses with a huge amount of investment, chances are if your business is ripe for venture capital investment they’ll come and find you.
Don’t waste time and effort chasing the Hollywood dream of venture capital turning you into the next Microsoft.
Instead focus on working local connections and finding genuine interest from real investors.
Never overlook the one place most people get money from – the bank.
If you have a well-established business, a strong business plan, and are considered low-risk, you can simply get a business loan from a bank.
There are a number of benefits to choosing a loan over an equity investment such as retaining full ownership of the business.
The disadvantages however are that if the business fails you will still have to repay the loan plus interest, whereas with an investor you will not be required to repay them (which is why investment is always a risk).
If you have a strong and stable business and don’t want to give up control of it, then a business loan could be the choice for you.
How to pitch your small business for investment
Once you’ve found a potential investor you need to pitch them your business to secure the investment.
While some people might invest in your business based on knowing you personally or having a “good feeling” about the business, wise businessmen will always want to see facts and figures before investing.
Creating the pitch begins with having a strong plan for the business. You need to know where you want to be in the next 1, 3, 5 or 10 years and know exactly how you’re going to get there.
That means doing the market research to show that there is sufficient interest in your product for you to grow into, and it means showing that you have considered other factors like economic downturn and general “worst case scenarios”.
However, while numbers are vital to showing you’ve done your homework and that the investor’s money is in safe hands, they aren’t enough to get someone excited about your business.
A good pitch is also a good story. It gets the potential investor excited about your business and it makes them believe.
If you can get people excited about your business, and provide the numbers that prove it could work, you’ve got a pitch that could help you win investment.
How much equity to give away
How much equity to give away is never going to be an exact science. Simply put, both parties are trying to get the best deal for themselves so it’s always going to be a negotiation.
As a business owner, you’d love it if you could get your entire investment while only giving away 1% equity, while your investor will try and walk away owning as much of your business as they can.
At its core, equity is based on valuation. So if you wanted £200,000 for 10% equity, you’re saying your company is worth £2 million.
However, if the investor has had your company independently valued at just £750,000 for that same investment they’d want at least 27% equity – but probably a lot more to account for the risk they’re taking.
In addition, you should take into account that while you make more money as your business grows, an investor only makes money when the business is sold or they sell their stake.
That means if you as a business owner hold more than 50% of the equity and make it clear you will never sell the business, a stake in your business is much less enticing as investors could be waiting a long time to see any return.
All of these aspects will be factored in to the eventual decision you and your investor come to.
P2P lending and crowdfunding
In recent years there has been a new trend in investment in the form of crowdfunding and peer to peer lending.
Crowdfunding is a term that covers sites like Kickstarter. They’re particularly good for getting the capital to start a business.
Essentially crowdfunding allows you to sell a product before it has been made, so it’s great for retail and other industries like gaming.
You create an account and a page to put forward your proposal. You then create different amounts people can invest to receive different levels of reward once the project is complete.
This can start from as little as £1 for something fun like a branded sticker pack, and has been known to go up to thousands of pounds as people pay to appear as a voice actor in the video game they funded.
If you’re already well known in your industry and have a following that is eager for your next product to be made, crowdfunding is definitely worth considering.
Peer to peer lending is a new breed of website that helps to put investors in touch with investment opportunities. It works a bit like traditional investments, however it gives businesses the opportunity to take lots of smaller investments instead of one or two large ones.
For the investor, P2P lending works a bit like a bond only with a much higher risk, and for the business it’s a good way to get some initial capital.
2. Get the right staff for your small business
When a business plateaus, often people will make the mistake of thinking that it’s because sales and marketing aren’t performing well enough, or that customer service aren’t ensuring enough customers come back.
However with new businesses it is often the case that the business is running at maximum capacity, and without taking on more staff, they simply won’t be able to grow at all.
Start with a gap analysis
So you’ve made the decision that you need more staff. The question now is where.
Do you need more salespeople?
Do you need more people to go out there and provide your service?
Do you need a completely new skill set that you don’t yet have in your business?
It’s easy to know you need more staff, but getting the right staff is the challenge. Get it right and you could push your business to the next level, get it wrong and not only will the business not grow but you then have an additional salary to pay.
To make sure you get the right people you need to perform a gap analysis.
A gap analysis is a business process where you look at your potential optimised performance (i.e. where you want your business to be) and you look at your existing performance.
By looking at these two points you should be able to work out where you need more staff. For example you may discover that you have plenty of your product and the capacity to produce more, yet you aren’t getting enough interest. This could mean staffing more in sales and marketing.
You might find that you’ve got plenty of leads coming in but you don’t have enough products or services to give out. This would mean you need more people on the production side.
Making sure you staff in the right places will help your business perform optimally and grow to the next level.
Decide how you’re going to recruit
Once you’ve decided what kind of staff you need, you need to decide how you’re going to get hold of them.
Essentially this means deciding whether to do it yourself or use a recruitment firm.
First of all, recruitment firms can be expensive. As a small or new business you probably try and avoid expense at every turn, so you might instinctively want to handle recruitment yourself.
However, there are a plenty of benefits to outsourcing recruitment.
A recruitment firm will have a good knowledge of the market. If you’re employing for a technical position like IT, it might be the case that you don’t really know what you’re looking for.
You know you need IT, but IT’s is a pretty big subject and you’ve got no idea whether you need a PHP developer or a network administrator.
A recruiter will go through the role with you, and they will know exactly what kind of person will be needed to fill that role.
A recruiter will also be able to get the job advert out into much wider circles than you could alone. For well paying positions they can even directly approach individuals they feel would be a perfect fit for the job.
Finally, using a recruiter will save you a lot of time.
You’ve got a business to run, you haven’t got time to be sifting through 200 CVs of people who simply aren’t qualified for the job.
With a recruiter you will be presented with a small handful of CVs, all of whom could do the job, so you simply have to decide who will be the best fit for you.
With that being said, when shouldn’t you use a recruiter?
When it comes to basic jobs that don’t require too much technical knowledge, chances are you can do it yourself.
Also, if you’re employing for a job like a cleaner or a warehouse operative people won’t be willing to travel too far, so you’ll get a smaller pool of applications that you can manage yourself.
In instances such as that there’s no point paying a recruiter to manage the process for you.
For complicated jobs by all means outsource recruitment. When it comes to cleaning, labour, and general admin you can manage recruitment yourself.
Experienced vs Graduates
When it comes to highly skilled roles there is another decision you need to make, and that is whether to choose someone experienced or a newbie to the industry.
The first and most obvious point is salary. Someone with a lot of experience can ask for a much higher salary than someone who is straight out of university. If your budget is limited, you might simply have to choose a graduate as you can’t afford someone more experienced.
However, that doesn’t mean you should always go for someone more experienced just because you can afford it.
When you choose a graduate you are getting someone who is fresh out of university. That means that they are bang up to date with all the latest industry trends and knowledge.
Sometimes this can give them a huge advantage over someone who is very experienced. A great example of this is in marketing.
If you employ a marketer who is in their 40’s or 50’s when it comes to running a traditional PR and print advertising campaign they will blow graduates out of the water.
However, if you’re a trendy brand and you know your audience needs to be targeted on Snap Chat, the graduate is going to have a much better knowledge than the guy with 30 years’ industry experience.
Similarly, even if a graduate doesn’t have the knowledge they’re going to have a ton of enthusiasm and drive to do well. They’ve got everything to prove.
A candidate who has been in their industry for 30 years might know everything there is to know, but they could be set in their ways, jaded, and simply looking for an easy ride into retirement.
Basically, if you’re looking for a safe pair of hands and have budget to spare someone with more experience is a good bet. If you have less money to spend, or are looking for someone who is fresh faced and will keep your company at the cutting edge of the industry then a graduate could be the perfect candidate for you.
3. Develop new sales channels, products, and services
If your business isn’t growing despite being well staffed and well-funded it could be that you’re stuck in a rut.
You might be the best thing in the world to your small fan base, but you’re a big fish in a small pond, and if you want to grow the business you need to get out into the wider world.
That means expanding your sales channels, targeting new markets, or creating new products and services.
Start with Market Research
So you’ve taken the plunge and you’re going to try something new. Great.
But before you invest your money you need to be sure that people actually want your new product. That’s where market research comes in.
You can do market research for free in a number of ways.
A good place to start is looking at your competitors. Look at both competitors of your size, and companies that you aspire to be like – the big boys.
Look at their products and services and see if they’re offering something you’re not.
Look at their social media and see what kind of people are engaging with their brand.
Are they the same type of people that use your products or are they from a different demographic entirely?
If your competitors have a much wider audience than you it shows that there are new markets for you to expand into.
If they have a similar audience but have more products, it shows that there are other products and services that you could be offering your audience.
Find threads about your industry or products like yours and look at what people are saying and the questions they’re asking.
If the same questions are coming up time and again and you can create a product or service that provides an answer then you’re on to a winner.
If you’ve looked at your existing customer base and discovered they’re all in one area, focus your research on finding more areas like that.
For example, if you’re selling a high end product and it fares well in affluent areas near London, you could try a campaign targeting the posh suburbs of other major cities.
This will work regardless of who your existing audience is. Just identify who they are, find more of them, and market to them.
In addition to this if you have a substantial amount of money to spend you can pay an ad agency to do market research for you.
They will go as far as to create focus groups, and can provide some incredibly in-depth and useful data about potential new markets and products for your business – providing you can afford it.
Create The Products And Service
Once you’ve done your market research you should have a good idea of what people want. If what people want is a new product or service it’s time to start developing it.
If it’s a physical product you’ll need to find a supplier or a producer. It’s always tempting to go with an existing provider, however it’s worth getting quotes off multiple people to ensure your existing provider is competitive.
And of course, price and quality aren’t the only things that need to be taken into consideration.
If you need someone who can provide you with new stock quickly and reactively you’ll need information about lead time, and if they operate 24/7.
Also if you can talk to existing customers of the supplier you can get a better idea of what the service and the relationship is like a few months down the line.
Creating New Services
If your market research shows that there are new services you should provide rather than products, the challenge will be training your staff to provide the new services.
An alternate option is to go down the staffing route to find new staff who are already trained in providing a similar style of service.
How can alldayPA help
Hopefully this guide will help you to push your business to the next level. While your business is growing you’ll find you’re taking more calls – that’s where we come in.
At alldayPA we provide outsourced telephone answering that ensures you never miss a call. Get in touch today to find out more.