with Den Lennie Issue 108 - December 2015
There are only 3 Ways To Grow Your Business There is a science and an art to business. But you should be aware that there are only three ways to grow a business.
1) Get more customers
2) Increase your average order value
3) Sell more frequently to existing clients
Lets look at these in turn:
Get more customers
The most obvious approach to increasing your business turnover is to sell to a larger group of customers. If you currently sell your services to 10 customers a year and generate £3,000 per customer, then your turnover will be £30,000. If you were to increase that by 30% (to 13 customers) who spend£3,000, your turnover will increase to £39,000. Simply by adding three more customers per year, youve increased your turnover by£9,000 (30%).
Increasing average order value
If you could increase the average order by 30%, thus turning a £3000 project into £4000 a project, even at the base rate of 10 customers per year, you would increase your turnover from £30,000 to £40,000 per year.
Sell more frequently to those customers
Lets now imagine that 30% of your existing 10 customers bought from you a second time, then you could add approximately £9000 of additional revenue to your annual turnover. With only three customers out of those 10 buying a second £3000 project, you will increase your turnover from £30,000 to £39,000. What makes this really cool is that if you increase each of these three areas simultaneously by 30%, you wont just increase your revenue by 30%, youll more than double it!
Your current position
Number of existing customers = 10
Current order value - £3000 per order
Purchase frequency one x per year
Total revenue £30,000
Increase customers by 30%
Increase average order value by 30%
Increase order frequency by 30%
Increased revenue would look like this:
30% more customers alone would yield the following:
10 customers @ £3000 = £30,000
13 customers @ £3000 = £39,000
30% increase in average order value would see an increase like this:
10 orders each @ £3000 = £30,000
10 orders each @ £4000 = £40,000
30% increase in frequency would grow your bottom line as follows:
10 customers order once @ £3000 = £30,000
3 customers order twice and spend an additional £3000 each = £39,000
The science part is where it gets really clever because if you do all three simultaneously here is what happens:
30% more customers - 13 @ £3000 = £39,000
30% increase in average order value - 13 @ £4000 = £52,000 30% increase in frequency - 30% of £52,000 = £15,600
New Annual Turnover = £67,600 against an existing T/O of £30,000
An increase of £37,600 thus doubling your business with only 30% increase across the three areas above.
Would you like to increase the amount of money your business makes by 100%? This is exactly the formula you need to apply in order to do so. Simple.
Increase Your Prices...Its Vital To Grow
Increasing prices is such an important part of growing your business that I want to discuss it in more detail. Its all about renement and repositioning you and your business away from a cheap product to a desirable and premium priced service.
Low cost, high quality and speed cannot coexist, and the kind of clients you want to be dealing with are people who understand this.
Take something as simple as ordering a product from an online retailer. If the item is in stock then you can usually select a variety of shipping methods, all priced accordingly. If you want that item the next day before 9am, then the shipping option for this is likely to be the most expensive compared to the standard shipping,
which takes two to three days. What this demonstrates is that if you want the item quickly, you pay a premium price. If you dont need it right away, then you choose a more economical shipping option. Speed and efciency is more expensive than slow and economical.
If you apply the same principles to your video productions, you can charge a premium for post-production if the client wants the item delivered quickly. Theres no reason why you cant charge a 50% additional premium on your edit rates for a quick turnaround.
Lets imagine your client would like a very high production promotional lm that they want to have a cinematic look and feel to. This will require you to work with the gaffer and additional lighting, perhaps a focus puller, a grip, and other production team that might include actors, make-up people, and a costume department. Your DP might choose a camera format like the Red Epic, Arri Alexa, or a Sony F55 with cine lenses and associated camera package. Its also likely it would take one or two days to shoot in a single location, taking care with every single frame.
However, if the client wanted this kind of high quality production, but only wanted a three hour shoot, then there would be a disconnect from the amount of time required to the quality of the end production. If they want quality, it takes time and money. High quality is generally associated with the addition of the best resources to guarantee the consistency of output.
Download a free chapter of Dens 206 page book BUSINESS for FILMMAKERS - The Quick, Dirty and Uncensored SECRETS to a SIX-FIGURE Video Business from the Worlds Ballsiest Filmmaker, at www.businessforlmmakers.com