Confidence is up in the small business sector, but where is the best place to focus on for growth? Small business owners give tips on diversification, new products and getting helpful feedback
For the first time since the Federation of Small Businesses started to monitor company confidence three years ago, more than half expect growth in the months ahead. While one in four is expecting to export, the majority are expecting to find growth at home. So, with the economy only just starting to improve, where are small businesses going to start looking for signs of untapped growth?
Five entrepreneurs offer the top tips they have used to push forward growth in their businesses.
1. Widen your remit
Julie White, managing director of the D-Drill group, saw the recession as the perfect prompt to research where the diamond drilling, concrete sawing and controlled demolition company could offer additional services to clients.
"SMEs need to ask themselves if they specialise in only one part of an overall service, can they diversify and offer a 'one-stop shop' to make life easier for your customer?" she suggests.
"In our trade, we are often called in to diamond-drill the holes for services in buildings. We now offer the initial scanning of the building to see where the holes need to go and then a fire-proofing option after the holes have been drilled.
"That saves the client time and money and has helped us to grow during the downturn, but it's still important to look for those types of growth opportunities now that we are coming out of recession."
2. New markets Quite often the expertise a small business has in its staff, products and services can be used to reach a new, related market. Ideally this new market should be experiencing growth and have a gap which can be filled by your company's products and expertise.
That was certainly the case for Ruark Audio which was facing ruin when demand for top of range hi-fi speakers contracted as people moved from specialist separate units to MP3-player docking stations.
"After 25 years, we were at the stage where we'd have gone out of business if we'd done nothing," says Alan O'Rourke, founder and managing director. "We looked at markets where our core skill set in creating top quality audio was needed and realised we should enter the radio market. There was big growth there through the expansion of DAB, yet, in general, the radios out there sounded pretty average to us. From a standing start in November 2006, we now turn over around £6m a year and have recently launched a new product we forecast will see the company grow by 40% over the next 12 months."
3. Find dissatisfied customers It can be human nature to concentrate on the positive, but one way to find new markets for your products and services is to do the exact opposite. Seek out the people who are not satisfied by your offering or the range a rival offers and find out why.
This may often mean taking a leap of faith, warns Brian Millar, director of strategy at Sense Worldwide: just because a customer knows what they do not want, it does not always follow they know the solution. That part is often down to you, and cannot always be researched through user group testing.
"We help companies to innovate by connecting them with people who are more future-thinking than the average consumer," he says.
"This might be ultra-endurance athletes, for understanding sportswear products, or special forces soldiers to give us insights into blister products.
"The key for small business owners is to think about the most extreme users of their product. Who's making their own? What do they miss in regular products that means they have to customise them? If you don't go out and find these dissatisfied people, they may well set up as your competition."
4. Ask your partners One of the best questions any company can pose to partners is what could they be doing to make their lives easier and what opportunities do they see emerging in the marketplace. After all, it makes sense that if you are dealing with people who are helping your goods and services reach customers, it is in their interest to offer useful feedback.
Certainly, Adam Sopher, co-Founder of Joe & Seph's Gourmet Popcorn, credits retailer feedback with a widening of the company's range, which has driven growth through extra flavours and opening up the gifting market.
"You have to go out and meet partners," he says. "Then, if it doesn't complicate your business, use their feedback to widen your range and find different ways of packaging your existing product to appeal to new consumers.
"We started out with just six flavours, but after a lot of feedback we've widened the range considerably. The added benefit of expanding your range is that the brand gets lots more shelf space, which drives consumer awareness. It was also through retailer feedback that we introduced a range of jars which has allowed customers to start purchasing our popcorn as a gift, opening up a whole new market for us."
5. Ask your customers The customer is normally one of the best people to ask where you could add value because they have probably researched the market before opting for your offering.
According to Julien Callede, the co-founder of the designer furniture business Made.com, this makes it all the more puzzling that more small businesses do not ask their customers for input and do not regularly use their own service to see where improvements might drive growth.
"Customer feedback tells you how to improve or adapt your current offer, what to change, what to stop, where to expand. This alone is 90% of the job and 90% of the growth opportunity," he says.
"We've used feedback to offer new products, improve our service and delivery, with extras like better tracking, as well as launch a new service for customers to order fabric swatches. Off the back of customer feedback, we've opened physical showrooms in London and, soon, in Leeds and we've expanded into France."
With all this talk of growth, a sobering thought from all entrepreneurs is that while new markets and customers are great opportunities, existing clients still need to be looked after. Drop the proverbial ball with those who have been loyal up until now and it is likely that new business will simply replace customers you have lost through a lack of attention to previous and existing clients.
This article originally appeared in theguardian on January 31, 2014.