Managing Business Growth
When starting a business, it’s tempting to want to leap to the top of the pack right away. You are throwing your money, time, and energy into your business, why shouldn’t it grow rapidly? More customers means more money, which means instant success. Right? Not always. Growing too rapidly can drain your pocketbook and time, leaving your customers to suffer the consequences. Slow growth, on the other hand, has many advantages.
Creating a Positive Customer Experience
When you add customers slowly you can focus on providing a positive customer experience. This is especially true of service-oriented businesses. Customers have an expectation of the level of care you will provide throughout the sales process and on an ongoing basis.
For example, I build websites for commercial businesses. I meet with the client to work out the website structure and gather content for the site. I help the client through technical issues during the site’s development. And finally, I help launch the site. But my relationship with the client doesn’t end on the day the website is launched. I am available after launch to address any issues that come up, to update content when needed, and to add design elements not built into the initial site. It would be hard for me to provide for customers’ needs if I was spending all my time chasing down leads. Slow growth helps provide a way to balance customer acquisition with devoting time to your current customers.
Choosing Your Customers
Building your customer base slowly also can lead to higher quality customers. A high-quality customer is one that purchases your products and services on a regular basis, pays their bills on time, and advocates for your business when given the opportunity. Depending on the type of business you own, you may be able to choose your customers at the same time they are choosing you. How do you do this? You get to know your customers. You talk with them about what they hope to achieve with your product or service, answer their questions in a timely manner, follow-up after the sale, and keep in contact through e-mail, newsletters, or the telephone. If you don’t see your customers face-to-face as is common with Internet-based companies, a friendly thank-you note that encourages feedback may be enough to gain insight into your customer base.
When you identify high-quality customers, focus your attention on providing the best customer service possible. You can do this because you have a small customer base. Your energy isn’t being drained by hundreds of customers that are providing minimal returns for your business. Focusing on high-quality customers doesn’t mean abandoning one-time customers or providing lesser service to smaller customers. These customers are important to the success of your business and should receive a high-level of customer service as well. Your goal in focusing on high-quality customers is to expend most of your resources where they will receive the greatest return. You can then apply the remaining resources to ensuring a great experience for all your customers.
One word of caution—growing your customer base too slowly can be hazardous to your financial health. If you have one large client that generates 90 percent of your work, you will be in rough shape if that client leaves. You need to find a happy medium between being selective with your customers and taking on enough business to sustain you financially.
Testing Your Market
You have researched your market while writing your business plan. You know the market size and trends, where your customers are located, and how they make purchasing decisions. But markets can be fickle. All the research in the world won’t help you if a market is disrupted due to economic, environmental, and political conditions or if customers veer in a new direction. By entering the market slowly, you can test the results of your research and your market assumptions without taking on huge losses if you were wrong. You will also be somewhat shielded from abrupt changes in your customer base. You may take losses when your customers change their buying habits, but your losses will be limited because you didn’t exhaust your resources making a large initial plunge into the market.