5 Ways to Grow Your Business in 2023
Published: January 6, 2019
Last Updated: October 29, 2022
The rush of the holiday season is over and we are moving into what is typically a rest, recover, and rethink period for business owners. As consumers and businesses take a break to let their wallets recover during the early part of the year, it becomes a great time to think about 5 ways to grow your business in 2023.
As I’ve been browsing my social media outlets in my downtime over the holiday break, I’ve observed many business owners don’t quite understand what that means or the value of the exercise. Here are a couple of Reddit thread titles in r/smallbusiness over the past week:
- Tips to increase revenue?
- Advice needed, do I hire a social media company?
- Want to expand my family’s Janitorial business
- Rebuilding my business brick by metaphorical brick.
- Advice on making ends meet
When reading into the specifics of the topics, there was definitely a common theme of lack of planning, and not realizing the importance of marketing. So, I decided the new year would be a good opportunity to help out with the following 5 ways to grow your business in 2023.
Review Business Performance
Understanding what went well and what didn’t is a key component of developing a plan for improvement and growth in the new year. I can’t stress the importance of writing this down because it will always look different on paper than it does in your mind. A good place to start is to look through your sales over the past year and answer a few questions.
- What products or services were the most profitable?
- What product or service represented the highest amount of volume?
- What was my most profitable sales channel?
- What was my highest volume sales channel?
Answering these questions will help you determine what is driving the growth of your business and you should look to invest in and expand the reach of these products and services.
Consider tactics like product placement, revising product bundling, or increased education efforts about the benefits of the products or service to your customers.
Note that understanding where high volume is occurring is key. Always review your high volume items to make sure that your processing orders efficiently, and have reviewed your supplier base for these items. These often represent cost reduction opportunities and you don’t want to miss out on potential volume discounts with a supplier for these products.
Understanding your sales channels is also a great way to grow your business. Make sure that $3k/year you’re spending on the Yellow Pages wouldn’t be better spent on direct mail or a website. Consumer preferences are constantly shifting and reviewing return on your investment in sales and marketing efforts should be at least an annual occurrence.
For instance, for businesses targeting consumers under 60, there has been a steady shift in advertising spend from offline to online channels. Younger generations use the internet significantly more as part of the purchasing process.
- What products or services were the least profitable?
- What products or services had the lowest amount of volume?
- What was my least profitable sales channel?
- What was my lowest volume sales channel?
Understanding your under performing products is a great way to increase profitability and growth. There are a lot of ways to mitigate the effects of under performing product sales. Offer them as part of a bundle at cost to clear the inventory, or place them in a clearance sale. One-offs can often be sold on eBay for a reasonable price if they aren’t moving locally.
Some products aren’t very attractive to sell, but are necessary evils. For instance, we have a client in the cleaning supplies business that has a high volume of toilet paper sales. They make hardly any money off the sale, but it’s a necessary part of the product line to retain customers. Try to mitigate the effects of these growth detractors by doing things like only offering order volumes that make the deal a good fit for you and the customer, e.g. the cleaning supply business might eliminate a 24 pack case offering and only offer a 48 pack case.
If you had some trouble answering these questions then you’ve already identified an area for improvement. We are living in a data economy and you should have a firm grip on your sales volumes and costs. This data should be easily retrievable, and the ability to analyze data and create a plan for action from it can be a competitive advantage!
Set Annual Goals
The best part about goals is that they help you align your resources towards achieving them. Keep a strong focus on a smaller number of objectives. Try starting with one growth goal, one process improvement goal, and one quality of life goal. Setting a goal in each area allows you to improve your weaknesses and find happiness in your craft. Some example goals that might help inspire you:
- Increase revenue by 15%
- Add 5 new products to the portfolio
- Increase cold lead volume by 30%
Process Improvement Goals
- Hire and train an account manager
- Vet one new supplier for a high volume product
- Document and streamline business process X
Quality of Life Goals
- Throw a mid-year company barbecue
- Take one Friday off per quarter to play golf
- Observe a volunteer holiday (Plant some trees on Arbor Day!)
Post your goals in a visible area so that they stay top of mind and try to bring attention to them and check your progress against them on a quarterly basis. Set calendar reminders now to do so!
Budget For Marketing
The quickest way to explain why you should budget between 5 and 15% of your projected annual revenues for marketing is that your business is extremely vulnerable to external shocks in the marketplace without a scalable marketing engine in place.
Recessions, geo-political occurrences, severe weather, and natural disasters are all things that can provide a sudden shock to your customer base which can be very financially distressing for businesses coasting on referrals. It’s very difficult to pull a pipeline of new leads together in a short enough time frame to recover from an external shock without a marketing engine in place. Marketing takes time and, more importantly, data to bring in cost effective leads. If you have drip spend in place across multiple channels it only becomes a matter of increasing the budget for the channels and tweaking their targeting to recover from a shock.
Scalable marketing engines are also great because they can prevent your business from overheating. What happens if you get an explosion of referral business coming in? A great reaction to that is to reduce marketing spend to cool your pipeline of other sales channels. You should be substantially more profitable during these periods. Make sure to keep cash reserves in place to stimulate demand for 6 months. Manipulating demand in this manner allows you to grow your business in a healthy manner, rather than feast or famine alternating reactionary periods of stress.
Example Tactical Marketing Reactions
A real world client example of an external shock and the proper tactical reaction: a business based in the Florida Panhandle weathers a hurricane. Their business sustains minor damage but approximately 30% of their customer base is affected. They have a baseline marketing spend of 10% of annual revenues. They need to stimulate demand after the hurricane so they elevate their marketing spend +50% of baseline to an annualized 15% rate, taking into account impact to projected annual revenues that the shock presents.
Imagine 6 months goes by and some of the impacted customer base resumes business operation and several new businesses start to open up. Demand increases and you approach your operating capacity while you begin recruiting new employees to expand capacity. Reducing marketing spend -50% of baseline to 5% of your revised projected annual revenues cools your pipeline and prevents brand damaging customer service problems from taking on too many customers or foregone revenues caused by turning customers away.
These demand manipulation tactics aren’t available to you to grow your business if you don’t budget between 5-15% of annual revenues to marketing. Businesses selling commoditized products or services where customers are price sensitive should be closer to 5% and businesses where sales are custom built, high margin products with complex sales cycle should spend closer to 15%.
Create a Marketing Plan
Have you mapped out a funnel of how you develop and nurture leads and ultimately turn them into customers? This can be a valuable activity because it exposes weaknesses in your funnel and you can direct your marketing efforts towards strengthening a particular area of the funnel. For simplicity sake, let’s break down the funnel into three chunks: awareness, consideration, and conversion.
Making customers aware of your product or service is a service in itself. Awareness is the first step in the purchasing journey. Some examples of offline awareness generators are:
- Word of Mouth
- Radio Ads
- TV Commercials
Some example online awareness generators are:
- Appearance in Search Results
- Social Media Conversations
- Referral Traffic
- Digital Advertising
Most people are usually pretty solid in this area because it’s relatively intuitive. If people never see or hear about your brand out in the wild then you’ll never have a chance to sell to them.
Take a moment to think back on 2018 and ask yourself how did you make your customers aware of your product or service? Are there any gaps worth filling? A great way to grow your business is to balance your resources across a normal sales funnel. Resist the urge to increase investment only in awareness without taking time to invest in middle funnel activities in the consideration phase.
Many people who become aware of your brand aren’t interested in your product or service or aren’t interested at that time. Of course there are impulse purchasers and people looking to buy immediately but there are a substantial chunk of consumers out there who move the consideration phase down the road. Many people are just plain old busy and may have a desire to purchase but can’t find time in their schedule to get around to it.
Proactive education is a great way to nurture leads from the awareness phase to the consideration phase and grow your business. There are a number of ways to do this:
- Email Marketing
- Offline Follow Ups
- Case Studies
- White Papers
- Demo Recordings
- Facebook Marketing
- Instagram Marketing
Find a way to provide a taste of value to your prospects while still enticing them to take action and move to the next phase. You can measure results with more granularity on your website (a key part of conversion funnels that often has touch point in awareness and consideration phases) by using tools like Hotjar and Google Analytics. If you’ve never done an in-depth conversion optimization exercise on your website this can be a great way to grow your business.
This is the part of the funnel that many people struggle with so I encourage you to take a little extra time to consider how to nurture prospects from the awareness to the consideration phase. Where can you improve in 2023?
By the time prospects reach the conversion phase, most of the heavy lifting has been done. The conversion phase is all about eliminating areas of friction in the purchasing process.
Probably the most well known streamlined purchasing process is the Amazon one-click ordering system. Strive to replicate it in your purchasing process, aim small and you’ll miss small.
Who knows, maybe Saquon Barkely will buy something from you.
Data is becoming an extremely valuable commodity in today’s business world and this is an area where many businesses are falling short. Market leaders in nearly every industry are collecting GOBS of data and using it to drive their decision making and expand their footprints. There has been a lot of speculation about a 2023data privacy bill in the United States to control the way companies are collecting and processing personal data with notable offenders like Facebook and Google leading the way.
Chances are you have the ability to collect valuable data you could use to grow your business and make marketing spend more efficient. At minimum you should strive to have the following data for every single customer you have:
- First Name (Company Name)
- Last Name
- Phone Number
- Email Address
- Purchase History
- Lead Source
If at all possible try to collect additional key demographic data that can help guide marketing spend, product bundling, and grow your business. Some example data for a B2B business might be:
- Annual Revenues
- Number of Employees
Some example B2C data might include:
- Birth Date (Consumers love birthday deals!)
- Annual Income
Data collection and usage can provide immediate near term benefits but can be invaluable if you reach a point of scaling, and can be instrumental if you ever need to raise capital.
Is there any data you could bake into your processes to collect and leverage to make better business decisions? Could the data have helped you capitalize on an opportunity to grow your business or avoid a setback in 2018? What could be improved in 2023?
Grow Your Business in 2023
Hopefully these 5 ways to grow your business in 2023 have been useful and given you something to think about. It’s tempting to finish up the holidays and go back to business as usual, but taking a few hours on the weekend to think about how you’ve done and what your plans are for the coming year can be a great help in guiding your decision making. Start by reviewing your business performance for the prior year. Set some annual goals in balanced fashion for growth, efficiency, and quality of life. Make sure to budget an appropriate amount of marketing so you can leverage demand manipulation tactics. Create a marketing plan for nurturing leads that guides your marketing spend and, lastly, bake in the collection of data into your processes! It can be an invaluable tool and a competitive advantage.
Thanks for reading!
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