Many people underestimate start-up costs involved in starting your own business. This means they are on the back foot financially from the beginning. This makes achieving your goals,breaking even and making a profit much harder as you can’t invest in the things you need to create a successful business.
To help you avoid this pitfall we’ve come up with seven revenue priorities for when you start your business.
1. Generate sales as quickly as possible
Your first priority when you launch your business should be to achieve some sales and break into the market as quickly as possible. To do this, here are a few proven tips:
- Ensure you have a compelling point of difference
- Build and promote your credibility
- Feature customer feedback in all your marketing avenues
- Actively ask for referrals
2. Work harder at value creation
Creating better customer value can be the key to more sales, plus it can help you by not having to compete on price alone. People are willing to pay more for a product or service they perceive has more value or can solve a problem they face.
So dig deep, what else do customers want when they buy your product or service? What are their unstated worries or frustrations? When you discover the pain points you can customise your product to be the solution.
For example:
- Offer better warranties or guarantees than competitors.
- Provide more value for money by bundling in extras—perhaps free installation or a help desk service.
- Solve common customer frustrations or anxieties.
3. Build dependable revenues
Enhance your business’s resilience by building recurring cash flow streams.
For start-up businesses, you would need to prepare an estimate of the capital costs you will incur. These may include land, buildings, plant, machinery, general and office equipment, furniture and signages. At the end of the estimates, add 20% for costs you haven’t thought of plus cost overruns. You’ll be surprised by how quickly unforeseen costs can actually add up.
In doing this you’ll find out just how much you’ll need to earn to have enough to get you through the next few months of operations. As soon as you’ve built up a dependable revenue base you’ll be able to lessen the effects of seasonality and even survive a possible downturn.
To make tracking your transactions more efficient you or your accountant should then prepare a cash flow projection for the first twelve months of trading. Set a revenue target from the outset, a number you can rely on in good times and bad.
4. Develop a menu
Customers like choice. At the moment you may offer only a few options or prices for your product or service. Think about whether you can expand what you offer to create a menu of options that gives customers more choice?
How can you repackage your products and services in easily understandable ways to build new or multiple revenue streams? You can go one step further and give the package a name and its own logo and branding.
5. Widen your customer base
Many start-ups develop their business around a few key customers. It’s therefore understandable that you’ll be focusing on keeping these relatively few customers very happy. However this can also make your business vulnerable. The loss of one or two big customers could devastate your business.
A hundred smaller customers are better than five big ones. Diversity is what gives your business the resilience to survive the loss of a few customers.
6. Develop repeat sales
Keeping customers is vital in a downturn or if the competition becomes cut-throat. Develop reasons for customers to come back to buy from you again. Good value and outstanding service are two keys to keeping customers and repeat sales. However this shouldn’t stop you from looking for more ways to lock in customers. A few examples are:
- Signing contracts
- Developing loyalty schemes
- Providing unexpected extras
- Offering access to special privileges
7. Flatten out peaks and troughs
Revenue troughs can make budgeting difficult and are the prime cause of cash flow crunches.
Peaks and troughs may result from seasonality so try to think about other products or services you could offer during your quiet periods to generate a more stable cash flow. Peaks and troughs can also be caused by poor Marketing.
Marketing is like sowing seeds in the sense that results may not be immediately apparent, it can take time to see the fruits of your labour. However many businesses then panic as lots of work comes in and stop marketing. They rush through all the work only to find that then they have nothing coming in. They then have to start marketing all over again and wait for the results.
That’s why it’s important to be proactive and market constantly even at a low level. Measure and test so you can adjust your marketing so it delivers regular ongoing leads.