You run a growing small to medium-sized business, but you’re worried that you’re starting to peak. Maybe sales have started to level off after years of steady increases year-over-year, and now you’re wondering what’s happened. You could be worried that you invested too much in hitting short-term goals while not planning enough for what to do once you reached this size. That can be an intimidating prospect, and it requires you to take a long, hard look at the future of your business.
Thankfully, there is a concept that, if you get it right, can alleviate this uncomfortable business stagnation and get you back on track to keep growing. That concept is sustainability, and it’s got a new look for 2021.
What is sustainability?
Sustainability can refer to a couple of different concepts. The first is related to the environment and avoiding the depletion of the Earth’s natural resources. If you’re interested in that kind of sustainability, you should check out our blog on giving your business a green thumb.
The other kind of sustainability is the one we’re talking about today. Broadly speaking, sustainability is the ability of something to be maintained at a certain level or rate indefinitely. Another way to think about sustainability is that it has to do with meeting your needs today without compromising your ability to meet those or similar needs in the future. That’s why sustainability is often discussed in conjunction with the first idea, that of preserving the planet for future generations.
For our purposes here, sustainability will focus not on future generations but on the future of your business. A hallmark of small businesses is that they are capable of tremendous growth in a short period of time. When companies get larger, maintaining a growth rate of one hundred percent or higher just isn’t realistic. But maintaining consistent growth and hitting short-term and long-term objectives while not flaming out and going out of business in ten, twenty, one hundred years…that’s what sustainability looks like.
Invest in Customers
When it comes to your business, there are two main people you should be concerned with: your customers and your employees. Both are extremely important, and while that may seem obvious, there are plenty of companies that neglect to take care of one or both groups.
Your customers are the people spending their hard-earned money on your business, so it’s no wonder they need to be taken care of. Now more than ever, consumers expect great service. Messaging needs to come from the top of the company that customers are considered lifetime customers. That doesn’t mean you can be lax in taking care of them—quite the opposite. It means you have a permanent obligation to make things right for your customers. When you do this, you can reduce your customer defection rate. And lowering that rate is well worth it. Acquiring a new customer costs five times more than keeping one, so lowering the rate at which they leave can be a cost-effective way to keep revenue up.
Driving sustainable growth also means getting those existing customers you’ve invested so much in to increase their sales too. You can do this by market penetration, alternative channels, and product development.
Market penetration is where you sell more of a product to existing customers. Encouraging customers to buy more of something can come in the form or new offers or deals or in the form of reminder ads where customers have to be nudged to by something they already know exists and have purchased before.
Alternative channels are different ways to sell an existing product in your product line. For a lot of companies, this means selling online instead of out of a brick-and-mortar retail store. The eCommerce industry grows at about 23% year-over-year, and yet 46 of U.S. small businesses still don’t have a website. All this while 41% of U.S. consumers receives one to two Amazon packages per week. Besides eCommerce, other channels you can try include rental models and SaaS models.
Finally, there’s product development, which is a bit riskier than the other two options but still a time-proven way to increase sales. With this method, you actually create new products for your customers. Product development is an expensive endeavor, but so long as you understand the needs of you customers, you have a high chance of the product having success.
Remember, understanding your customers is critical to making smart investments in them. According to Insurance Quotes, 14% of businesses fail because they ignore their customers. In the same infographic, they point out that 42% of small businesses fail because there is no market need for their products or services. What that points to is the desperate need to conduct market research in an attempt to truly understand your customers’ needs, preferences, and experiences. Ways to collect this include surveys, focus groups, or just accessing existing industry research. Alternatively, just ask your clients directly. Use this to inform your growth strategies, but also use it to make meaningful change that they will notice. People like to be heard, so listen to them.
Invest in Employees
Disgruntled or underappreciated employees can make a work environment—physical or online—a toxic environment to be in. Unhappy employees are unlikely to deliver the exceptional service that you ask of them, making customers unhappy. Similarly, companies that don’t treat their staff as a top priority fail to attract and retain top-level talent. About a quarter of businesses with between five and nine employees say finding and keeping food workers is a serious problem.
So, what can you do about this? Well, it begins with how you hire. When you put a job listing out there, Insurance Quotes recommends you entice talented workers with job advertisements, not job descriptions. The difference is that descriptions consist of every aspect of the job including each day-to-day activity the worker will be engaged in. On the flip side, job advertisements promote only the most exciting or appealing parts of the job. That doesn’t mean you should be dishonest. Tricking workers will get you to lose them even faster. It’s simply a matter of highlighting the good parts of the job so the candidates you are looking for decide to apply.
Keeping top-level talent is also about making a positive impact in employees’ lives, one of the pillars of the triple bottom line of sustainability. Your employees need to be empowered to do their jobs and trusted to make some, if not all, important decisions on their own. With an open-door policy and an environment that encourages constructive internal communication, your team will feel valued and part of a team—a critical element for continued growth.
Invest in Technology
Before you can invest in your people and start reaping the benefits of happy customers and talented employees, you need to make sure that your underlying infrastructure is sound.
Take cybersecurity, for example. Once, it was just an afterthought. Now, however, it should be at the forefront of every business owner’s mind. A single ransomware attack can costs millions of dollars and sink a small company for good. And if you’re in any of these industries, you need to be especially cautious:
- Healthcare: Millions of records were stolen in data breaches in 2020, and providers already overwhelmed by the pandemic have been under siege by ransomware.
- Retail, technology, and government, these industries accounted for a whopping 95% of breached records in 2016.
On top of that, small businesses are the target of 43% of all cyberattacks. Businesses need to be adequately protected from cybercrime or they risk the integrity of their entire business. Solutions like email filtering, antivirus software, firewalls, network security, and data backups and disaster recovery are no longer fringe investments. They are cost-effective insurance against risks. Nothing stops your business growth faster than a cybersecurity breach.
RELATED: 10 Reasons Why You Should Back Up Your Data
You don’t just have to worry about unexpected disasters when it comes to technology. You should be concerned first and foremost with the day-to-day tools that you and your team count on to deliver exceptional service. Many small businesses have not adequately planned for their technology becoming obsolete over time. All technology goes through a life-cycle, and if you’re not thinking ahead, one day you will wake up and realize it all needs to be replaced. Talk about expensive.
A better solution is to prepare with a technology roadmap, an internal document that your company prepares in order to outline plans to leverage its IT infrastructure to meet both short-term and long-term goals. You do this by identifying what technology tools need to be mapped, what requirements you have for them (capabilities, price, etc.), identifying major technology areas to achieve those requirements, and finally by making selection. This lengthy process can be made easier with the help of a managed service provider, if your company works with one. They likely have created hundreds of technology roadmaps for their clients, so they know how to help you leverage your IT as a strategic asset.
A Chance to Keep Growing
By making investments in your people, your customers, and in your technology, there’s nothing you can’t to in 2021 and beyond. Don’t lose track of your vision, no matter what’s going on in the outside world. Be flexible; don’t break. Hold tightly to your principles and you’ll be just fine. At Machado Consulting, we firmly believe in our core values of service, acting with integrity, persevering through adversity, and staying dedicated when others would give up. That has served us well throughout this pandemic, and we know that with the right tools and the right plan, you can do the same.
