As a small-business owner, the day will hopefully arrive when you are ready to expand and grow your business. It’s the American dream to “be fruitful and multiply” (King James Bible) and practically every American’s duty to follow “life, liberty and the pursuit of happiness” (Declaration of Independence). In the U.S., that means expansion and growth.
But even for seasoned business folk, expansion can be a scary thing. How do you diversify and find new clients? Should you form business alliances? What is the role of social media in marketing your newly prosperous business?
Many of those questions can be answered by Jim Alles, the New York City chapter chairman of SCORE, a resource partner of the Small Business Administration (SBA). The former president of the British-based chemical giant Imperial Chemical Industries, Alles was also a CEO in the brewing and oil-refinery industries and has worked in pharmaceuticals and solution polymers. And after retiring at age 50, he started a small, successful chemical company.
“At SCORE, we help people manage their cash, apply for financing, write business plans, rework their strategy for growth, and understand marketing—both traditional, as well as social media and e-commerce,” Alles says.
The national SCORE website is an invaluable resource for small business. All local SCORE chapters (14,000 counselors strong) offer free advice and counseling, helping more than 5,000 clients alone in the New York City area in 2012. Here, we offer some of that advice to you, with five tips from Alles for expanding your small business.
1. Make a Financial Plan. “All good plans will contain separate marketing and sales plans that deal with competitors and customers, as well as a product plan and an operation plan. Those plans drive a set of financials dealing with your profit and loss (P&L) statement, which usually goes out three to five years and will help you understand what changes will occur in terms of revenues and expenses. Perhaps you want to spend $10,000 next year in advertising: A year or two later, you will have new sales. It’s forecasting. So you put the investment amount and your revenues in the P&L to see the hopeful profit impact and timing of that impact. You need a plan even if it’s just bullet points. What are you going to do and when?”
2. Expand via Diversification. “If you understand your client’s needs, you can add a new product or service and start selling it to them, as well as new clients. I have a client in environmental engineering; he asked his clients what new service they wanted, and they responded: a service based around building sustainability. He employed experts in that area, and he made sure the new service was of the same quality or better than his existing services. The rule is to make sure your diversification addresses a need of your existing clients.”
3. Target New Markets. “If you are a commercial architect, branch out into the residential field. Look at all the money spent on residential condo or townhouse renovations. Most of those clients are people of wealth who won’t go looking for commercial architects to remodel their home. That’s a simple tip, but it’s effective, and that’s an untapped market.
“Also, look at who is buying the expensive properties in the U.S.—it’s Asians and Europeans. Meet with the local Chinese or German embassies or consulates, and when those businessman or tourists come to town, meet with them. Put out feelers and business cards, and set up meetings. Get your name on the list as an architect with the embassy, and learn about their cultural tastes. Hire someone who speaks Mandarin and understands Chinese taste in design.”
4. Form an Alliance. “You form an alliance because the potential partner has the client base you want access to, and you’re taking something new to the potential alliance partner. When you put the two companies together, you offer one-stop shopping. Look at how the banks have diversified by offering clients every banking service known to man. If you have excellent service delivery, look for a company that has excellent client acquisition or marketing. It’s about strengths and weaknesses.”
5. Free Marketing Through Social Media. “Use Facebook, LinkedIn, and Twitter to post events, new product offerings, sales, software specials—anything new and different. LinkedIn has expanded their product offering, and they are modifying their software to make it better for businesses to find each other. What’s great about Twitter is the range of different accounts: The whole culture is there. If you’re a fan of a particular designer, you can respond to their tweets, and everyone who follows that designer will see your response. If your tweet is interesting, other people will follow you. And on YouTube you can post videos of satisfied customers, tag them with searchable keywords, and link the videos to your business website. You can have a whole YouTube catalog of success stories.”
For more tips on expanding your small business, check out this article from the SBA’s website. And stay tuned later this week for more small-business expansion tips from Alles on marketing, urban-versus-suburban markets, common mistakes, and employee communication.