Whether to expand operations, raise profits, or shelter against economic disasters, it’s crucial to continue growing your business. Growth takes time, strategy, and money, but there are plenty of ways to make an impact without overspending.
Here are five tips for growing your business on a tight budget:
1. Rethink your marketing strategy
To attract new customers and improve sales, start by revisiting your marketing plan, beginning with the budget. “I recommend businesses spend anywhere from 2-8% of their budget on marketing,” said Ken “Mr. Biz” Wentworth, a business advisor and the owner of Mr. Biz Solutions.
The key to smart spending is determining which of your marketing strategies have the highest ROI. Ideally, “you should expect a 300% return for every dollar you spend,” Wentworth said. “Ten thousand dollars spent should equal a $30K increase in revenue.”
Aim to review the cost and return of your marketing efforts at least once a quarter to see what worked and what didn’t. Maybe you saw a high return from email campaigns, for example, but barely got a response from the mailers you sent.
“If you find that $6K of the $10K you’re spending doesn’t help you make money, you can re-allocate that,” Wentworth said.
Depending on your budget, you can re-allocate the money to one of your existing distribution channels or use it to try a popular marketing method, like video. According to Wyzowl’s 2020 State of Video Marketing report, 84% of consumers said they bought a product or service after watching a brand’s video.
“People do business with folks they know, like, and trust,” Wentworth said. “The easiest way for a customer to get to that place is to determine a bit of your personality and value offers by watching a video you put out.”
2. Cut costs
Trimming the fat in your business can give you more cash to put toward marketing or growth projects.
“When you’re cutting expenses the most important thing to do is make sure the cuts you’re making aren’t impacting your revenue pipeline,” said Wentworth. Go through your expenses and assign a score to each one, he said: three points if it directly impacts company revenue, two points if it indirectly impacts revenue, and one point if it doesn’t impact revenue at all.
“Expense lines that score a five or six, I’d stay clear of making reductions on those,” Wentworth said. Instead, he recommended making 20-30% reductions on expenses that score in the mid-range, and 50-100% reductions on your lowest-scoring expenses.
You can cut costs on low-scoring expenses by switching to free business solutions wherever you can. “There are clever ways to get the same value for a need for much cheaper,” said Kean Graham, the founder and CEO of MonetizeMore.
3. Bring value to customers
Finding creative ways to bring value to potential customers can help you secure new business. Consider what you can offer beyond your products and services, whether it’s a niche podcast, how-to video, free ebook, or infographic that sheds light on a confusing topic.
Blog posts that cater to your audience’s needs are a great place to start, Graham said. “People search on Google how to do things. That is how they will find your blog and eventually sign up for your offering.”
If you run a janitorial business, for example, you could write a blog post with deep cleaning tips or step-by-step instructions for getting rid of common stains.
Another way to bring value is by acting as a resource. “We answer ad optimization-related questions on Google Product Forums, Quora, Twitter, and Reddit,” said Graham. “We have found that this enables positive interactivity with sub-communities, establishes us as authorities, and drives many qualified leads [to our site].”
4. Emphasize customer reviews and referrals
Gathering customer reviews and referrals is one of the best ways to expand your customer base. According to BrightLocal’s 2019 Local Consumer Review Survey, 82% of consumers read online reviews for local businesses, and 91% of consumers said positive reviews make them more likely to use that business.
“It goes back to ‘know, like and trust.’ If someone a customer knows, likes, and trusts recommends my business, then that new customer feels good about it,” Wentworth said.
Consider posting on social media or sending an email to customers thanking them for their business and asking them to write an online review. You can also incentivize customers or clients to refer you to their friends and family by offering future discounts on products or services.
Just make sure you actually read and respond to the feedback you receive, though. According to the survey above, 71% of consumers said they’re more likely to use a business that responds to its reviews. Take the time to thank customers for their comments and address negative feedback in a polite, constructive way.
5. Build relationships with other businesses
Developing relationships with other businesses can help you generate buzz, discover new potential customers, and increase revenue.
Forming strategic partnerships is helpful, Graham said. “We have successfully set up partnerships with companies like Google and WP Engine, which have sent valuable traffic [to our site] on a consistent basis.”
You can also collaborate with businesses for events, fundraisers, and cross-promotions. If you sell specialty bath products online, for instance, you could team up with an at-home massage service to offer customers product bundles and discounted spa treatments.
Business relationships are a great way to tap into new markets and make your current customers feel valued.
Growing your business on a tight budget may seem daunting, but it’s doable. Learning how to market strategically, cut costs, and nurture customer relationships can set you up for long-term success.
Disclaimer: Fundbox and its affiliates do not provide financial, legal or accounting advice. This content has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for financial, legal or accounting advice. You should consult your own financial, legal or accounting advisors before engaging in any transaction.