Some of the biggest conglomerates today started small. Microsoft started in Bill Gates’ garage; and so did Apple, which was started in the garage of Steve Wozniack. Mark Zuckerberg started Facebook in his dorm room, and so did Michael Dell when he started Dell. Mattel was also started in the garage of designer and co-founder Harold Mattson, while Google initially operated in the garage of Susan Wojcicki, currently a vice president at the company.
However, these businesses grew and became the largest companies in their industries and in the world. These once-small businesses succeeded with a solid business model, the right product offerings, marketing savvy, and management skills.
With the right elements and luck, your small business today might just become the powerhouse of tomorrow’s business. How can you transform your business from a home-based endeavor to a multi-million enterprise? The reason for the phenomenal success of many firms hinges on common elements that reveal the secrets of business success.
Here are some tips on how you can grow a small business into a multi-million dollar venture:
1. Offer products or services that can be marketed on a large scale.
Choose a business that has the potential to expand and could provide you with a wide reach of potential customers. Some business ventures, particularly home businesses, have inherently limited growth opportunities. Businesses such as bookkeeping, landscaping or secretarial services, usually have too limited a market to attain million-dollar sales. A donut or coffee shop is geographically limited and can attract only people in the neighborhood. Significant growth for this kind of business lies in your ability to market the business for franchising. A mail-order house, on the other hand, can reasonably target people throughout the entire country and beyond.
If you want to earn seven-figure revenues, your business needs to reach a large customer base, and you can achieve this through marketing nationally or internationally. Marketing your business in your county or municipality alone may not support the kind of expansion that you are planning for your business. If you cannot market on a national (or at least regional) level, though, the best strategy is to either market in metropolitan areas of major cities or go online and sell on the Internet.
2. Provide something different from what’s already in the marketplace.
You need to look for ways to distinguish your product or service from others who are already in business. You cannot expect to sustain significant growth when your products or services are hardly distinguishable from the competition. Being unique however does not mean that no one else is providing the same product or service; it can mean that no one else is providing the product or service in the same way that you intend to provide it. It can also mean that you are the only provider of the product or service in your locality. You can create differences simply by finding better ways of serving selective segments of a market. This sometimes is accomplished just by adding a new twist to something old, or by marketing more creatively.
3. Target specific markets that can be reached through affordable means.
The distribution method that you choose significantly affects both your costs and your revenues. Which marketing options will reach the most customers at the lowest cost? Small businesses inherently have practical limitations on the ways they can reach markets. The key questions that you need to consider in deciding your distribution channels are financial resources and cost-effectiveness. What can you afford? What will give you the most return for your buck? Advertising in major publications, online portals, or buying a spot during the Super Bowl; and establishing a national sales force are beyond the reach of most home businesses. A small enterprise needs to work harder at focusing its limited resources of time and money. In choosing the best distribution channel for your business, you need to factor in the costs and time involved in entering the channels, your experience with the channels, and which channels best reflect the product positioning that you believe is crucial to your success.
4. Generate volume revenues from each customer.
Look for businesses where you will have a lot of repeat customers or where people will need to keep buying supplies or products from you. Small and home-based businesses cannot expect to earn million-dollar sales from one-shot selling or low-priced products or services. Do the math: how many sales do you need to earn a million dollars if you are doing a single sale of ten or twenty dollars each? A must for a growth-oriented business is to either create products or services with repeat sales potential or have high unit-selling prices.
5. Drive the business with new products or services.
Product development is oftentimes a hit and miss process for small businesses. New products are introduced only as a reaction to competitive challenges or because of the development of proprietary technology or patents. However, traditional management theory provides that every product, idea or concept has a life cycle: no matter how spectacular a product may be, sales will almost always start to fall off eventually. You need to be able to identify whether the demand for your product or service is increasing, leveling off or declining. Determine if there are opportunities for your company’s products to be refreshed in the marketplace by being repositioned, improved or brought out in a new size, flavor or package. Or if the old product has outlived its usefulness, you need to be able to pick up the slack by introducing a new product in the market.
6. Continuously readjust to the marketplace.
Time will bring new opportunities as well as changes likely to affect what business is already doing. Technology also moves quickly, that some products see some shorter life cycles. Shifting gears as demand moves up or down is critical to continued growth. You need to be flexible in adjusting your marketing strategy and product offerings.
7. Grow at a controlled pace and keep failures manageable.
One rule of thumb in business: there is never any certainty. While market research oftentimes can provide you with a ‘gauge’ as to market acceptance, that “can’t miss” idea sometimes does. New products or services may not take off right away and possibly not at all. Make sure that you are still able to manage the growth of your business. Experienced entrepreneurs enter new markets in stages and never put themselves in a position where one failure jeopardizes everything that’s been built over the years.
8. Hone management skills.
Most small enterprises fail within the first three years of operation due to business and managerial incompetence on the part of the entrepreneur. To transform yourself from kitchen-table entrepreneurs into professional corporate managers, you need to learn how to operate in a complex, multidimensional environment. Learning new business skills should be a constant process, particularly in the areas of marketing, product development, human resource management, and financial management. No matter how skilled you are at creating a product, providing a service, or marketing your wares, the money you earn will slip out of your fingers if you do not know how to efficiently collect it, keep track of it, save it or spend it wisely.
This article was originally published on September 6, 2012
Recommended Books on How to Grow a Small Business:
- 15 Ways to Grow Your Business in Every Economy
- The Small Business Bible: Everything You Need to Know to Succeed in Your Small Business
- Grow to Greatness: Smart Growth for Entrepreneurial Businesses
- Conquer the Chaos: How to Grow a Successful Small Business Without Going Crazy
- The 7 Irrefutable Rules of Small Business Growth
- 10 Tools of Profitable Revenue Growth
- Factors to Consider When Entering a New Target Market
- How to Make Money from Your Inventions
- What Works on the Web? 12 Lessons From Successful Home-based Online Entrepreneurs
- 8 Lessons in Managing Large Accounts