Kitplus - The TV-Bay Magazine

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COMMENT HOW TO GROW YOUR BUSINESS Den Lennie 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 Let’s look at these in turn: Get more customers Your current position Number of existing customers = 10 Current order value - £3000 per order Purchase frequency one x per year Total revenue £30,000 Strategy Increase customers by 30% Increase average order value by 30% Increase order frequency by 30% 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. Increased revenue would look like this: 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, you’ve increased your turnover by£9,000 (30%). 30% increase in average order value would see an increase like this: Increasing average order value 30% increase in frequency would grow your bottom line as follows: 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 Let’s 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 won’t just increase your revenue by 30%, you’ll more than double it! 42 | KITPLUS - THE TV-BAY MAGAZINE: ISSUE 108 DECEMBER 2015 30% more customers alone would yield the following: 10 customers @ £3000 = £30,000 13 customers @ £3000 = £39,000 10 orders each @ £3000 = £30,000 10 orders each @ £4000 = £40,000 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