{"id":3676,"date":"2016-08-22T05:36:16","date_gmt":"2016-08-22T12:36:16","guid":{"rendered":"http:\/\/evergreensmallbusiness.com\/?p=3676"},"modified":"2016-08-17T09:30:44","modified_gmt":"2016-08-17T16:30:44","slug":"grow-small-business","status":"publish","type":"post","link":"https:\/\/evergreensmallbusiness.com\/grow-small-business\/","title":{"rendered":"How to Grow a Small Business"},"content":{"rendered":"

\"Picture<\/a>Some friends, all small business owners, got together over the weekend. As people tend to do at these get-togethers, the discussion soon turned to business. And one of the more interesting topics covered was how to grow a small business in a mature niche.<\/p>\n

In other words, not how to grow a small business in an exploding market. And not how to grow a small business in a venture with embarrassingly fat profit margins. But how to grow a small business in a more typical and perhaps mature industry. The sort of small business that\u2019s profitable and a great deal for the owner\u2014but not so profitable that giant upside opportunities justify taking on big risks or bringing in outside investors.<\/p>\n

People had a bunch of interesting ideas to share. But four ideas\u00a0in particular jumped out at me\u00a0as more than just the usual, true-but-superficial ideas of trying to increase your prices and then the number of customers and products. So\u00a0I thought I\u2019d share these perhaps slightly outside of the box ideas.<\/p>\n

Grow Your Small Business through Reinvested Profits<\/h2>\n

A first idea, which seems unremarkable on its face, looked smarter and smarter as people discussed it.<\/p>\n

Before you even start growing your operation, you do need capital to support your growth. You\u00a0can of course get that capital from a variety of sources: the bank, personal funds, reinvested profits, outside investors, and so on.<\/p>\n

But the consensus seemed to be that you wanted to grow through reinvested profits. Growing through reinvested profits meant by definition you were sure to be growing a profitable business. And growing through reinvested profits meant you didn\u2019t have some perhaps well-meaning but unknowledgeable outsider influencing decisions.<\/p>\n

People emphasized, too, that you wanted to be reinvesting real, already earned profits and not anticipated profits. In other words, you didn\u2019t want to do what many big, fast-growth companies do\u2026 which is reinvest hoped-for profits.<\/p>\n

Starbucks, reportedly, did this with their business plan at least in the days before the Great Recession. The firm might commit to open a new location in year 3 using the profits they hoped to earn in year 2 on a store they were planning to build and open later on in year 1.<\/p>\n

Don\u2019t get me wrong. I\u2019m impressed the management team was able to sequence their site development and location openings in this manner. If you\u2019re a Starbucks shareholder, absolutely, you want Starbucks to grow their business as fast as they can.<\/p>\n

But for small businesses, group consensus was, you and I want to go slower. First, because slower works more safely when you have those tighter profit margins typical in a small business. That makes sense, right? You and I just don\u2019t have as much financial cushioning to deal with setbacks or stalls if profit margins are tight and we have to personally pay for any mistakes.<\/p>\n

And then, second, let\u2019s admit it. In our small businesses, we have neither the management infrastructure nor sophisticated information systems to support a business plan with hundreds of moving parts that need to fit and work together just right.<\/p>\n

But that\u2019s okay. We don\u2019t need that infrastructure or those systems if we\u2019re careful and go slow.<\/p>\n

Grow Only through Fat Margin Services or Products<\/h2>\n

Another useful thought from the discussion: People with lots of business experience noted that many of the products and services that small businesses sell aren\u2019t really profitable or aren\u2019t very profitable.<\/p>\n

Some products and services get added to a firm\u2019s menu of offerings because an important customer really wants the item. Or because an employee wants to provide the item. Or maybe because the item is really cool or truly useful to people. And sometimes vendors even indirectly push a small firm to bump their capacity (by leasing more space or buying more powerful and more expensive equipment) which also pushes small firms to grow revenues if only to pay for expenses.<\/p>\n

But the thinking of the group is, with tight margin small businesses, a firm needs to be truly careful to grow primarily (or ideally \u201conly\u201d) through the addition of fat margin services and products.<\/p>\n

As an accountant, I see this second idea as really good and very common-sensed. You and I will find that growing a business with profitable services and products greatly eases the liquidity and working capital requirements of the growth. (This is particularly important in a low profit margin or normal profit margin business.) And then though it is easy to focus on revenues, we\u2019ll find that the discipline of focusing on profits makes us engineer better products and services.<\/p>\n

Grow with Right-fit Customers and Clients<\/h2>\n

A related idea to this notion of growing a business with new fat margin services and products… Once this point was made and discussed, people also pointed out the importance of adding the right<\/em> type\u00a0of customers and clients.<\/p>\n

Now obviously, one can grow revenues by adding any old product or service and any customers or clients willing to pay their invoices. But adding profitable customers and clients sometimes requires more effort. Customers and clients who buy your or my most profitable products and services, and with typical customer or client service burdens, make for right-fit relationships.<\/p>\n

And then this weird observation. Even if you and I are, superficially, in the same business, your “right-fit” customers or clients may be different from my “right-fit” customers and clients. You may, for example, have arranged your operation to very efficiently handle clients or customers who look and act a certain way. But these clients may be a poor fit for my shop.<\/p>\n

A general guess: I wonder if we don’t\u00a0serve best customers and clients similar to those we already efficiently serve with fat margin, high quality products and services.<\/p>\n

\u00a0Grow Opportunistically and in Spurts<\/h2>\n

Near the end of the discussion about how to grow a small business, a fourth interesting\u00a0idea popped up. People seemed to think you often grow a small business not steadily but rather in spurts.<\/p>\n

A small business, for example, can\u2019t simply open up five or ten new locations each year, thereby producing predictable arithmetic growth.<\/p>\n

More commonly, a small business gets to grow because the firm suddenly gets access to a new resource that bumps their capacity. Or a firm suddenly sees a new customer or client need it can help fill. Or a great new player joins the team and brings new contacts or skills and these support a step up in revenues.<\/p>\n

Big businesses, I think, often seem to munch away at large markets which they steadily capture over years and years.<\/p>\n

Small businesses, by definition, don\u2019t. Small businesses uncover a $500,000 or $5,000,000 opportunity, quickly capture some big percentage of the market, and then wait patiently and watch closely for the next opportunity to become visible through the fog.<\/p>\n

A Final Comment<\/h2>\n

You might read the preceding paragraphs and conclude small business opportunities simply don\u2019t deliver enough profit and upside to merit your interest. But if that\u2019s what you\u2019re thinking, I respectfully disagree. Small businesses can provide you and your family with great financial outcomes. But the smaller scale of these operations and the leaner financial and management structures mean you and I need to be realistic.<\/p>\n

All that said, keep in mind that if you steadily grow your business by, say, 12% year for a half a dozen years, you\u2019ll double your revenues. If you double your revenues, you\u2019ll usually more than double your profits. You might for example, triple or quadruple or quintuple your profits.<\/p>\n

If that occurs, you\u2019ll find yourself quietly enjoying a rather excellent financial outcome.<\/p>\n

Relevant Related Posts You Might Like<\/h2>\n

Has a Jedi Knight Ever Visited Your Business?<\/a><\/p>\n

Smart Wealth Strategies of the Top One Percent<\/a><\/p>\n

Using the Delphi Method for Small Business Problem Solving<\/a><\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Some friends, all small business owners, got together over the weekend. As people tend to do at these get-togethers, the discussion soon turned to business. And one of the more interesting topics covered was how to grow a small business in a mature niche. In other words, not how to grow a small business in […]<\/p>\n","protected":false},"author":1,"featured_media":3678,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[12,5,16],"tags":[],"class_list":{"0":"post-3676","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-management","8":"category-new-business","9":"category-strategy","10":"entry"},"yoast_head":"\nHow to Grow a Small Business - Evergreen Small Business<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/evergreensmallbusiness.com\/grow-small-business\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How to Grow a Small Business\" \/>\n<meta property=\"og:description\" content=\"Some friends, all small business owners, got together over the weekend. As people tend to do at these get-togethers, the discussion soon turned to business. And one of the more interesting topics covered was how to grow a small business in a mature niche. In other words, not how to grow a small business in […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/evergreensmallbusiness.com\/grow-small-business\/\" \/>\n<meta property=\"og:site_name\" content=\"Evergreen Small Business\" \/>\n<meta property=\"article:published_time\" content=\"2016-08-22T12:36:16+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/evergreensmallbusiness.com\/wp-content\/uploads\/2016\/08\/iStock_000083910621_Small.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"842\" \/>\n\t<meta property=\"og:image:height\" content=\"570\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Stephen Nelson CPA\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@SeattleCPA\" \/>\n<meta name=\"twitter:site\" content=\"@SeattleCPA\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Stephen Nelson CPA\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"7 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/grow-small-business\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/grow-small-business\\\/\"},\"author\":{\"name\":\"Stephen Nelson CPA\",\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/#\\\/schema\\\/person\\\/81bbd61b04df6d67d261eaa871e65e36\"},\"headline\":\"How to Grow a Small Business\",\"datePublished\":\"2016-08-22T12:36:16+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/grow-small-business\\\/\"},\"wordCount\":1330,\"commentCount\":8,\"image\":{\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/grow-small-business\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/wp-content\\\/uploads\\\/2016\\\/08\\\/iStock_000083910621_Small.jpg\",\"articleSection\":[\"management\",\"New business\",\"Strategy\"],\"inLanguage\":\"en\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/evergreensmallbusiness.com\\\/grow-small-business\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/grow-small-business\\\/\",\"url\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/grow-small-business\\\/\",\"name\":\"How to Grow a Small Business - Evergreen Small Business\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/grow-small-business\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/grow-small-business\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/wp-content\\\/uploads\\\/2016\\\/08\\\/iStock_000083910621_Small.jpg\",\"datePublished\":\"2016-08-22T12:36:16+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/#\\\/schema\\\/person\\\/81bbd61b04df6d67d261eaa871e65e36\"},\"breadcrumb\":{\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/grow-small-business\\\/#breadcrumb\"},\"inLanguage\":\"en\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/evergreensmallbusiness.com\\\/grow-small-business\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en\",\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/grow-small-business\\\/#primaryimage\",\"url\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/wp-content\\\/uploads\\\/2016\\\/08\\\/iStock_000083910621_Small.jpg\",\"contentUrl\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/wp-content\\\/uploads\\\/2016\\\/08\\\/iStock_000083910621_Small.jpg\",\"width\":842,\"height\":570,\"caption\":\"Picture of a small plant growing in a jar filled with coins\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/grow-small-business\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"How to Grow a Small Business\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/#website\",\"url\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/\",\"name\":\"Evergreen Small Business\",\"description\":\"Actionable Insights from Small Business CPAs\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en\"},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/#\\\/schema\\\/person\\\/81bbd61b04df6d67d261eaa871e65e36\",\"name\":\"Stephen Nelson CPA\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/fa0c0563c8278d739d19e83181897fe96010490739f2050455931c5de2bf7fdd?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/fa0c0563c8278d739d19e83181897fe96010490739f2050455931c5de2bf7fdd?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/fa0c0563c8278d739d19e83181897fe96010490739f2050455931c5de2bf7fdd?s=96&d=mm&r=g\",\"caption\":\"Stephen Nelson CPA\"},\"url\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/author\\\/seattlecpa2014\\\/\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"How to Grow a Small Business - Evergreen Small Business","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/evergreensmallbusiness.com\/grow-small-business\/","og_locale":"en_US","og_type":"article","og_title":"How to Grow a Small Business","og_description":"Some friends, all small business owners, got together over the weekend. As people tend to do at these get-togethers, the discussion soon turned to business. And one of the more interesting topics covered was how to grow a small business in a mature niche. In other words, not how to grow a small business in […]","og_url":"https:\/\/evergreensmallbusiness.com\/grow-small-business\/","og_site_name":"Evergreen Small Business","article_published_time":"2016-08-22T12:36:16+00:00","og_image":[{"width":842,"height":570,"url":"https:\/\/evergreensmallbusiness.com\/wp-content\/uploads\/2016\/08\/iStock_000083910621_Small.jpg","type":"image\/jpeg"}],"author":"Stephen Nelson CPA","twitter_card":"summary_large_image","twitter_creator":"@SeattleCPA","twitter_site":"@SeattleCPA","twitter_misc":{"Written by":"Stephen Nelson CPA","Est. reading time":"7 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/evergreensmallbusiness.com\/grow-small-business\/#article","isPartOf":{"@id":"https:\/\/evergreensmallbusiness.com\/grow-small-business\/"},"author":{"name":"Stephen Nelson CPA","@id":"https:\/\/evergreensmallbusiness.com\/#\/schema\/person\/81bbd61b04df6d67d261eaa871e65e36"},"headline":"How to Grow a Small Business","datePublished":"2016-08-22T12:36:16+00:00","mainEntityOfPage":{"@id":"https:\/\/evergreensmallbusiness.com\/grow-small-business\/"},"wordCount":1330,"commentCount":8,"image":{"@id":"https:\/\/evergreensmallbusiness.com\/grow-small-business\/#primaryimage"},"thumbnailUrl":"https:\/\/evergreensmallbusiness.com\/wp-content\/uploads\/2016\/08\/iStock_000083910621_Small.jpg","articleSection":["management","New business","Strategy"],"inLanguage":"en","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/evergreensmallbusiness.com\/grow-small-business\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/evergreensmallbusiness.com\/grow-small-business\/","url":"https:\/\/evergreensmallbusiness.com\/grow-small-business\/","name":"How to Grow a Small Business - Evergreen Small Business","isPartOf":{"@id":"https:\/\/evergreensmallbusiness.com\/#website"},"primaryImageOfPage":{"@id":"https:\/\/evergreensmallbusiness.com\/grow-small-business\/#primaryimage"},"image":{"@id":"https:\/\/evergreensmallbusiness.com\/grow-small-business\/#primaryimage"},"thumbnailUrl":"https:\/\/evergreensmallbusiness.com\/wp-content\/uploads\/2016\/08\/iStock_000083910621_Small.jpg","datePublished":"2016-08-22T12:36:16+00:00","author":{"@id":"https:\/\/evergreensmallbusiness.com\/#\/schema\/person\/81bbd61b04df6d67d261eaa871e65e36"},"breadcrumb":{"@id":"https:\/\/evergreensmallbusiness.com\/grow-small-business\/#breadcrumb"},"inLanguage":"en","potentialAction":[{"@type":"ReadAction","target":["https:\/\/evergreensmallbusiness.com\/grow-small-business\/"]}]},{"@type":"ImageObject","inLanguage":"en","@id":"https:\/\/evergreensmallbusiness.com\/grow-small-business\/#primaryimage","url":"https:\/\/evergreensmallbusiness.com\/wp-content\/uploads\/2016\/08\/iStock_000083910621_Small.jpg","contentUrl":"https:\/\/evergreensmallbusiness.com\/wp-content\/uploads\/2016\/08\/iStock_000083910621_Small.jpg","width":842,"height":570,"caption":"Picture of a small plant growing in a jar filled with coins"},{"@type":"BreadcrumbList","@id":"https:\/\/evergreensmallbusiness.com\/grow-small-business\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/evergreensmallbusiness.com\/"},{"@type":"ListItem","position":2,"name":"How to Grow a Small Business"}]},{"@type":"WebSite","@id":"https:\/\/evergreensmallbusiness.com\/#website","url":"https:\/\/evergreensmallbusiness.com\/","name":"Evergreen Small Business","description":"Actionable Insights from Small Business CPAs","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/evergreensmallbusiness.com\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en"},{"@type":"Person","@id":"https:\/\/evergreensmallbusiness.com\/#\/schema\/person\/81bbd61b04df6d67d261eaa871e65e36","name":"Stephen Nelson CPA","image":{"@type":"ImageObject","inLanguage":"en","@id":"https:\/\/secure.gravatar.com\/avatar\/fa0c0563c8278d739d19e83181897fe96010490739f2050455931c5de2bf7fdd?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/fa0c0563c8278d739d19e83181897fe96010490739f2050455931c5de2bf7fdd?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/fa0c0563c8278d739d19e83181897fe96010490739f2050455931c5de2bf7fdd?s=96&d=mm&r=g","caption":"Stephen Nelson CPA"},"url":"https:\/\/evergreensmallbusiness.com\/author\/seattlecpa2014\/"}]}},"_links":{"self":[{"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/posts\/3676","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/comments?post=3676"}],"version-history":[{"count":0,"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/posts\/3676\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/media\/3678"}],"wp:attachment":[{"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/media?parent=3676"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/categories?post=3676"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/tags?post=3676"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}