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    Welcome to Grow Your Business

    Grow your business

    1. Plan for growth

      Having started your business and reached the point where you are making a profit on the products or services you sell to customers, you need to start thinking about how to grow your business.
      Many businesses think of growth in terms of increased sales, but it’s also important to focus on how to maintain or improve your profitability.
      Things you can do to help grow your business include:

      As your business grows

      • You must register for VAT if your VAT taxable turnover reaches more than £82,000.
      • You may also find that a different legal structure is more suitable as your business grows.
      • Contact the business support helpline in your area for help and advice on starting or growing your business.
    2. Get extra funding

      Growing your business, whether through increased sales or improved profitability, often means you need to invest more. You can do this by:

      • investing previous profits back into your business
      • taking out a loan
      • selling shares to outside investors
      • looking for other sources of finance, including government-backed schemes

      Find out which types of finance might work for your business.

      Find public finance using the finance finder tool, or search for private finance.

      Professional advisers such as accountants can help you to work out whether it makes financial sense to take on loans or investment. You should take legal advice before taking on new investment in your business.

      Find a chartered accountant on the Institute of Chartered Accountants (ICAEW) website, or a solicitor on the Law Society website.

      Taking out a loan

      You should make sure that your business will be able to pay back the debt before you take out a loan. Repayments are often made in instalments over a number of years, and you’ll need to pay off any interest on outstanding debts.

      If you’re a sole trader looking for a loan, a lender might ask you to provide a personal guarantee or promise to hand over assets like your house or car if you can’t repay the loan.

      Selling shares

      If you’re thinking of bringing in new investors, they’ll want to know how much your business could increase in value if they buy shares. To work this out, they’ll need to know how much their investment will increase your sales and profitability.

      You’ll need to provide potential lenders and investors with a financial model showing:

      • how your business will spend the extra money to increase sales and profitability
      • how initial costs and increased ongoing costs will affect your cash flow

      Increases in sales usually only happen after taking on additional costs like employing more staff, moving to larger premises or putting in bigger orders for raw materials. You’ll need to take all of these into account in your financial planning.

    3. Increase sales to existing customers

      How you go about increasing sales depends on your circumstances and how your business is performing. You might choose to focus on customers who have already bought from you, or you could try to win new customers in your local area, nationally or overseas.

      The simplest way to increase your sales is to sell more of the products or services you’re selling at the moment to the customers who are already buying them. For most businesses this involves:

      • persuading one-off customers to become repeat customers
      • finding customers who’ve stopped buying from you and trying to win them back
      • selling more of the same products or services to your regular customers

      By keeping a record of who your customers are and what you sold to them, you can work out who’s stopped buying from you, and who might consider buying more. Targeting these customers is often a cheaper and more effective way to increase sales than trying to find new ones.

      Review your prices

      Regularly reviewing your prices and checking them against your competitors can be an effective way of increasing your sales, profits or both.

      You should try to estimate the likely effect of different price changes on the sales, cash flow and profitability of your business before making any changes. To do this successfully, you need to understand:

      • the ‘cost structure’ of your business (including regular ‘fixed’ costs, and ‘variable’ costs that change according to your business’ activity)
      • the value your customers place on your products and services

      Watch a video on dealing with cash flow problems, including handling late payments.

      It’s worth bearing in mind that offering a discount can sometimes reduce your overall profitability, even if your sales go up. Equally, you might be able to make more profit overall by increasing prices, even if you’re selling fewer items.

      Small changes to pricing like providing loyalty schemes or bulk discounts can increase sales to both existing and former customers.

      Example

      A car wash offers free cleaning every tenth visit if customers opt for the deluxe service. Even though they’re giving something away for free, the value of repeat business from loyal customers means that profits go up.

      It is likely that it would have cost significantly more to generate the same amount of sales with new customers, resulting in less profit.

      You should also regularly check the price you’re selling products and services at against competitors. This will help you find out if you’re:

      • losing customers who get the same product or service elsewhere for less money
      • sacrificing profitability, because customers are willing to pay more than you’re charging them

      Find resources on pricing strategy and increasing sales on the Marketing Donut website.

    4. Attract new customers

      One way of finding new customers for your products and services is by increasing awareness in your local area. You can do this by:

      • asking your customers to recommend you to their friends and colleagues
      • advertising in local media
      • using other forms of marketing, including online

      You could also talk to potential customers who don’t use your business at the moment and find out what it would take for them to switch from your competition.

      Expanding outside your local area

      If you want to sell your product or service through new sales channels or markets elsewhere in the UK, there are different organisations you’ll need to work with, including:

      Watch a video on the different ways of getting your product or service to market.

      You could also try using direct marketing to find new customers.

      Search the contracts finder for business opportunities from government departments and agencies.

      Expanding outside the UK

      You might decide to find new customers outside the UK by exporting your products. UK Trade and Investment offers help and resources on successfully selling your products and services to customers in other countries.

      Make sure that you’re aware of your legal responsibilities around the sale of goods and services, and data protection.

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