So you want to grow your small business in 2021?
But… how exactly do you do that?
In the past, I would have tackled this from a purely marketing standpoint. I would have written about developing new relationships, growing your audience, and creating more compelling messages.
I might have added something about offer development and looking for how to better meet the needs of the people who come to your business for help.
And those business development activities are valuable.
But today, my approach tends to be more on the operational side of things.
I’ve seen for myself and for many small business owners that:
When I’m prepared for growth operationally, I’m much more likely to do what needs to be done (and in a way that’s actually effective!) to fill the capacity I’ve created with marketing & sales.
Before we can tackle the question of operational growth, we need to decide how we want to grow in the first place.
You’ve probably heard before that there are only 3 ways to grow a business:
- You can sell to more (new) customers.
- You can increase the average transaction value.
- Or, you can sell to your existing customers more frequently.
Let’s break those down by what they actually mean for you and your business operations.
Selling to more (new) customers
This is where most people assume they have to focus: “If I want to grow the business, I gotta go out and get more customers!”
And hence why I used to focus on growth as a marketing and offer development challenge.
But even still, selling to more customers only works if you have the capacity to handle those customers. Otherwise, you get yourself in a big ol’ bind when you’ve taken on more work than you can handle and things start getting sloppy.
Increasing the average transaction value
Simply put, this means making more money for every purchase made. You can typically get there two ways:
- Raising your prices on your existing offers
- Increasing your scope of work so that people pay more
This is one of the most efficient ways to grow your business because it generally doesn’t require you to make many changes at all and your business will still generate more revenue.
However, there are limitations to this strategy. You’re often constrained by the prices that the market will bear, the skills you have to deliver on a more extensive scope of work, and the type of customers you currently have access to. I say “often” because these constraints are overcome-able and many times people confuse assumptions for actual constraints.
To overcome these constraints, you typically do address operational, marketing, and offer development processes.
Selling to your existing customers more frequently
There are a few ways you can accomplish selling to your existing customers more frequently.
One is through subscription—which is one of the reasons subscription models have gotten so popular. Each recurrence of a subscription is a transaction—so you’re essentially selling to your existing customers on a regular basis. This doesn’t always work out math-wise in the short-term, but over the long-term, it typically does.
Another is by developing a new offer. When you create a new offer, you’re giving people who have bought from you previously something new to buy—which is an easier sale than selling to someone new.
And then finally, you can sell the same thing multiple times. I often have a mental block around this one! If you have a finite service offer or a physical product, customers often want to become repeat buyers and giving them opportunities to do that is an easy way to grow your business.
While there are obviously marketing & offer development activities that go toward selling more frequently to your existing customers, this is also an operational challenge. To create predictable repeat business, you need to have the kind of customer experience that inspires people to buy again. It’s not just how useful or valuable your product is.
Time to choose
At this point, you might be thinking: “I’ll do all 3!”
Yeah, I’m right there with you. Doing all 3 sounds great.
But it’s a recipe for an unfocused and overwhelming experience.
The truth is that all 3 might happen but, to stay focused & committed, you want to choose just 1.
Yes, I said it: choose just 1.
Over the last few years at The What Works Network, we’ve been focused on creating the conditions necessary for the 3rd strategy, selling to our existing customers more frequently, as we built out a subscription model that served people for as long as possible.
Next year, we’ll turn our focus to selling to new customers—and growing our audience to do just that.
At YellowHouse.Media, we’ve been focused on transaction value because our model is based on consistency and efficiency (both for our benefit and for our clients’ benefit). Next year, we’ll be focused on frequency as we invite people into a new membership site called Standout Podcast Club.
Choosing how you want to grow your business is the first step to choosing at least one of your Strategic Priorities for next year.
A strategic priority is something you choose to focus on for a period of time as a way of creating movement toward your vision.
How you want to grow might end up being your Strategic Priority or it might show you what else you need to focus on to make it happen.
As I mentioned, our Strategic Priorities at What Works have focused on operational capacity for the last few years. So now we’re ready to name audience growth as a Strategic Priority. (Here’s how I have it named so far: “Connect with and gather the next generation citizens of The What Works Network.”)
At YellowHouse.Media, our Strategic Priority has been about building out the systems we need to consistently and efficiently deliver for our full-service production clients. Next year, we’ll build on that work by bringing on additional team members to execute those systems so that Sean and I can put more of our energy on our membership site.
So while we know we want to grow in terms of frequency of purchase, we also know we need to expand operational capacity to get there.
➡️ Action Step: Choose the strategy you’ll focus on to grow your business.
Do the math
Alright, if there’s one thing people hate more than “choosing 1,” it’s “doing math!”
But that is the next step.
In order to really get at where you want to focus your energy strategically, you’ve got to do some math on what you’re selling and who you’re selling to.
First, consider your revenue target for next year.
I call this a target instead of a goal on purpose. I’ve written before about how goals—especially revenue goals—have really messed me up in the past.
“Target” fits well here because, in order to “aim” your business at that target, you need to make different decisions about metaphorical force, velocity, angle, etc… In this case, those decisions about how to aim at your target about who you’re serving, how you’re serving them, and what kind of offers you’re making.
Let’s say your revenue target is $250,000 for 2021.
There are lots of different ways you can get there, right? You can sell an offer for $250 to 1,000 people. You can sell a $2500 offer to 100 people. Or you can sell a $25,000 offer to 10 people. The options go on and on.
But for each option, we’re describing a distinctly different business.
A business that sells a $250 offer to 1,000 functions very differently than a business that sells a $25,000 offer to 10 people.
By defining your people, price point, and product, you’re making clear decisions about the operations of your business.
Now, you already have an offer that you’re selling (maybe a few):
- If you’re thinking that you want to sell to more people, you can determine how many sales you need to make at your current price point to hit your revenue target.
- If you’re thinking you want to raise your average transaction value, you can set your new price and then determine how many clients you need to serve at that new price point to hit your target.
- And if you’re thinking you want to increase your purchase frequency, you can determine how many purchases you want customers to make at what price points (and whether you need a new offer to make that happen) to hit your target.
In the end, you’re going to arrive at an equation that looks something like:
# of Customers * Price point * Frequency = Revenue Target
This is simplified, of course. You might have an offer mix that requires something more like:
(# of Customers * Price point * Frequency) + (# of Customers * Price point * Frequency) = Revenue Target
➡️ Action Step: Find your equation with the variables that represent your desired way to grow.
Which brings us to the most important question for planning for 2021
It is not enough to know how you want to grow, choose a Strategic Priority, and do the math.
Those things have to lead to a plan that then leads to concrete, productive action.
The question that I like to ask to figure that out is simply:
How does my business need to adapt to accommodate X customers at Y price point?
That’s one of the fundamental questions that all strategic planning and operational growth is based on.
And if you don’t know what to work on to grow your business, it’s likely because you haven’t answered this question.
To swing back to what I admitted in the opening, I don’t automatically start talking about growth by talking about marketing anymore because marketing is rarely the answer to this key question.
(Sometimes it is! But you better make damn sure that there is no other answer to that question before you settle on marketing & sales being the answer.)
To truly answer this question, it helps to break things down.
- How does my business need to adapt in terms of my offer and how it’s delivered?
- How does my business need to adapt in terms of my team and how we manage?
- How does my business need to adapt in terms of our systems and workflow?
- How does my business need to adapt in terms of our scheduling and time management?
- How does my business need to adapt in terms of our technology?
- How does my business need to adapt in terms of support and collaboration?
You get the idea. Your business likely has its own set of questions that would be helpful here—but these should get you started.
Once you know how your business needs to adapt, consider what’s most likely to “break” if the adaptation isn’t made but your business grows anyhow. What’s most likely to cause a catastrophic (or even just really unpleasant) problem first in terms of your wellness, your customers’ experience, and the health of the business overall?
- Will I have more work than I can do in a day?
- Will my systems not be able to deliver consistent results?
- Will my team feel completely overwhelmed and unsupported?
The goal here isn’t actually to find your worst-case scenario. It’s just to examine where you anticipate there being a problem so you can address that first.
Here’s an example of how this works for us at YellowHouse.Media:
How does our business need to adapt to accommodate 100 podcasters inside Standout Podcast Club at $99/month?
- I need to have sufficient time (5-8 hours per week) to answer questions and create content. I also need sufficient time to execute our SEO strategy (2 hours per week).
- Sean needs to be able to step away from project management more often.
- We need to be able to trust our team members to be more self-guided on larger parts of each show we manage and our team members need to trust themselves.
- We need to adopt new technology (Clickup) to manage the multi-faceted project management we do.
- We need to keep our existing clients happy and taken care of while we devote significant resources to another area of the business.
There are 2 places where I see this breaking first: my time and our technology (which frees up Sean’s time).
So those are the projects we’ve prioritized first in terms of next steps. I am rebalancing my time & schedule between my two companies and Sean is diligently plugging away at moving our project management to Clickup.
Both will hit the ground running in January!
So that’s how we connect a desire for growth, with a strategy for growth, with an examination of needs, with a project plan we can execute.
At this point, I’ll also say that even if you’re focused on marketing & sales in 2021, there is probably an operational component to what needs to happen.
For instance, I need to be focused on audience growth at What Works next year. To do that, I need to develop a system for pitching podcasts, posting to social media, and developing effective advertising. The activities themselves are marketing-based but developing the system requires an operational perspective.
➡️ Action Step: Determine how your business needs to adapt to accommodate the growth you desire and what your top priorities for change are based on what’s most likely to cause a problem first.
Make the plan
Now you’ve decided how your business is going to grow, what that looks like in terms of real numbers, how your business needs to adapt, and what the top priorities are.
You finally have the raw data you need to make a plan you can execute.
From here, I take the pressing items—the adaptations I need to make because they’re most likely to break—and turn them into projects I’ll complete in Q1.
A project is specific and actionable, takes 4-8 weeks to complete, and serves both your Strategic Priorities and the larger Vision you have for your business.
Once I’ve identified the projects I need to complete, I complete a Project Brief for each one. The Brief answers these questions:
- How will I know when this project complete? How will I measure the results?
- How long will the project take to complete?
- Why does this project matter? How does this project help the company fulfill our Strategic Priorities & get closer to our Vision?
- How can the team lend support? How can colleagues or peers lend support?
- What resources are we devoting to this project?
- What are the high-level tasks required to complete this project?
Now that I know what’s involved in the project and I’ve gotten a better handle on how it fits into my capacity, I can put it into my plan. Typically, I assign 3 projects per quarter (essentially, 1 per month—but it never quite works out that way!).
Once I’ve taken care of the pressing things, I can move on to other projects that serve my strategy and how my business is adapting to growth throughout the rest of the year.
➡️ Action Step: Determine what projects you need to complete to support your desired growth and when you’ll schedule them.
If you want to grow your small business in 2021, start by determining which of 3 strategies you want to focus on: more customers, higher average transaction, or more frequency of purchases.
Then, translate that strategy into numbers. Determine how many customers you need, paying what price point, purchasing how many times to reach your revenue target.
From there, consider how your business needs to adapt to accommodate those numbers.
Finally, turn the adaptations you need to make into projects you can put into your plan for the year.
I’ll leave you with this:
I’ve tried to make this process as straightforward as I can. And truly, I believe the planning process is more straightforward than most people expect it to be.
But that doesn’t mean that it’s easy or that you’re going to feel 100% confident in the plan you create. You might be making (more or less) educated guesses about what you want, how you’ll get it, and how your business needs to adapt.
Making a guess and creating a plan based on your guesses is going to be more helpful than winging it. Always.
Just remember that your plan is a hypothesis. Your plan can and should evolve based on new information, new conditions, and new ideas. You don’t want it to go whichever way the wind is blowing but you don’t want to be rigid about it either.
Having a plan gives you something to work from and helps you find focus when things get wobbly.
And that, ultimately, will help you create growth for your small business in 2021.
Want to work with me to create your plan for 2021? Join me for The Commitment Blueprint!