Starting a new business and making it profitable is a difficult feat. The Bureau of Labor Statistics tells us that 20% of start-ups fail within a year. Fifty percent will be history within five years.
But an even greater challenge is transforming a small company into a big company. A vanishingly small number of small business models will ever reach $250 million in annual sales. That number is just one-tenth of 1%. The percentage of firms that become “unicorns” — $1 billion AR –- is just 0.036%!
To have a chance at gaining the big leagues, small operators need a clear-cut growth strategy. What does that entail? Let’s look at four models that have proven to help a new company scale up.
Just Sell More
You may have noticed that it’s getting harder to buy just a six-pack of soda or beer. It’s also the trend to sell toilet paper in 24-roll packages, rather than four. The reason is that big companies have figured out that by offering only larger packages, consumers are forces to buy more whether they want to or not. The idea, then, is to find a clever way to make your customers buy more, even when they prefer not to.
Expand Your Base
One of the fastest ways to ramp up a business is to establish more locations as soon as possible. An example is a firm called Express Employment Professionals. It started with one office in Oklahoma City. The plan from the beginning, however, was to go with a franchise model. That enabled this company to achieve 588 locations nationwide in record time.
Nurture Alternative Channels
The buzzword among the giant retailers these days is omnichannel. Behemoths like Wal-Mart, Amazon and China’s e-commerce giant JD.Com are aggressively pursuing sales channels online and in brick-n-mortar locations so they have more ways to reach customers and sell to them. Your small business simply must develop an internet platform for selling to a national or potentially global market.
New Products for Captured Customers
Okay, this is a version of the classic upsell, as in “Do you want fries with that?” Once you have a captured customer base, you need new and/or additional products to go after extra sales. Scaling with a single product is difficult. A key is to develop new or add-on products.