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Many SMEs have great stories to tell. If you have a vision, you will not stop sharing and listening. That vision grows then into a pitch. As soon as you get financing, a product launch follows, you gain traction in the market, and the business starts to soar.A few years go by, and the idea has grown beyond the playing field. But today, you might find that revenues are stagnating.
How do you boost your revenue, and what should you aim for exactly, especially in a period of uncertainty like this one?
At some point in the entrepreneurial journey, expansion seems the right thing to do. Of course, the risks can be considerable.
The unknown local market dynamics can be a factor in whether the trip is for you. There may be logistical and, in some cases, linguistic hurdles. And large expenditures can be enough to derail even a stable business.
Here are five steps to reduce those risks and manage the hurdles:
- Step #1: Choose your market
Consider proximity and the time zone. Is Brazil, for example, better suited than the US, or South Africa better than Germany? Also, consider what the cultural and linguistic divide means to you, especially if you need to speak English.
- Step #2: Fine-tune your proposition
Research what local competition offers and what demand customers have. Use industry events and virtual networks to make contacts and get insights from people working in the country. Introduce your proposal to the local market and collect feedback. Adapt your product or service offerings based on your research. Set your prices according to regional supply and demand and reflect your actual costs and needs with an appropriate margin. Avoid currency traps in which you convert your prices into local currency.
- Step #3: Structure your go-to-market strategy
Use virtual offices, virtual contacts, or white label the salesforce to make it all work. That way, you can get out pain-free if it doesn’t work out. This phase is crucial because you need to structure your lead-to-cash process to cater to international customers. Participate in local trade fairs, enrich your contact list and use external agents.
- Step #4: Be bold and go for the big fish
Large customers might be fed up with market leaders, and, as a challenger in an entirely new market, they might be ready to listen to you. Punch above your weight and push hard to win their accounts. Your domestic business gives you a cushion to support your future growth in the country.
- Step #5: Strengthen your position
Once the regular revenues arrive, it is time to expand your local activities and move into the business-as-usual phase. In this phase, it can be cost-effective to take over your own office and hire and train local employees. You can also look beyond your initial niche and begin to reach out to numerous smaller customers. Once your local business is on its feet, it may be time to consider your next move to your following country.
How to start? Your existing customer base holds the answers.
It is not easy, of course, and my conversations with CEOs and founders show some tricky steps to take. Some will require time and money, both of which are scarce. Your existing customer base may contain the answers.
Technology-driven SMEs feel this problem particularly. Excessive focus on technology, combined with the pressure to grow over several years, make them ignore essential assets needed for future growth, such as customer insights.
Ask yourself how much you know about your customers. Is the data limited, or do you have enough information to provide your services?
Your customers’ data has a wealth of information to enable you to push new boundaries. These insights can give you information about the best type of organizations you address, the people to reach, and the messages you convey to them. Overall, this can be a defining moment.
Growth or Profit? The cash problem.
As your launch progresses, you gain traction with a well-designed core product or service, encouraging financials and a thriving customer base.
But focusing on growth does not mean the business model should not be profitable, or the company should give away its products or services to reach as many customers as possible. There is always the temptation to grow and own more things by employing many salespeople and other staff. You may need to rent larger premises, pay heftier insurance premia, lots of IT and more.
The reality is that you are limiting your options for the future and increasing your liability. And it feels good to do it now.
It is also possible to run into problems like this. With so many orders, the operational side of your business can feel overwhelmed and unable to keep up with the delivery of products and services. If service levels drop, you lose valuable customers to the chaos. Without orders, you are essentially an empty machine.
Profitability is not enough
However, let us assume that you get your budget allocation right, increase turnover and be profitable. You may wonder whether you should be focusing more on growth rather than profit. The answer is that you are missing something essential: the focus on cash.
I have seen growing and profitable companies go under due to a lack of cash flow management. It is tragic when a unique vision, idea or career goes up in smoke because the business has not focused on the right dials and controls.
Cash is the lifeblood of any business. It doesn’t matter if a huge success is just around the corner if your funds are drying up.
- Get a clear idea of your revenue and cost model for keeping the cash flowing smoothly.
- Balanced growth and profitability in your strategy, and ensure they are always in sync with cash flow.
- Manage your stakeholders: for them, buying a realistic medium- to long-term strategy takes the stress out
- Even when your reserves are healthy, avoid the temptation to spend on purchases you don’t need.
- Create accurate forecasts. It gives you a greater sense of confidence and security, a sense of your proper financial health so that you can make good decisions for growth and sales.
We often hear that the level of uncertainty we are experiencing today is unprecedented, implying that we have reached a peak and will only increase. Entrepreneurs and small businesses must coexist with uncertainty.
Don’t stop your thought process and review your strategy and proposal for ways to differentiate. Do not standstill. Get to know your buyer personae: you can talk to them about their journey as buyers.
When you are ready for change, you have the drive and determination to push it through. It’s when you’re in the right frame of mind to grow. Then your vision will take shape.
You probably know the story of the Buridan donkey. A hungry and thirsty donkey finds itself halfway between a haystack and a bucket of water. The paradox suggests that he will die of hunger and thirst because he cannot decide to prefer one to the other.
One sure thing NOT to do is to stand still.
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