08 Oct Some ideas to grow revenue in a service company
In a previous post, I wrote about finding the value of your business and how it varies according to who’s in the market looking to buy (including the different types of buyers). But how can you systematically drive up the value of your company? Increasing the size and profitability of your business is the surest way to increase its value. That’s easy to say, but which ideas are most suitable for the owner of an IT service company? First let’s focus on specific suggestions that can increase your top-line revenue.
Improve your marketing & sales effectiveness –Marketing improvements refer to the ongoing process of planning and promoting your products and services. Most of us are trying to figure out the best ways to use the new media–Internet/search-based marketing, email, and social media—and how to measure their effectiveness. Do you have a plan to use the marketing channels that are most suitable for your business and can you measure their effectiveness? Sales improvements refer to the process of converting potential customers into paying customers. Most companies have employees dedicated to sales, but that’s not enough. They need a system, a repository, a training program, and a way to measure and improve the effectiveness of salespeople. Finding a good sales manager is one of the hardest things for a small business owner and, in some cases, he or she may have to fill that role until the company grows and can attract the right candidate.
Enter and dominate a niche—One of the best ways to grow a small company is to enter a niche market and become a major player in that specialty or vertical market. For example, we know technical service companies that have grown impressively by focusing on particular industries such as manufacturing, health care, or legal services.
Differentiate your business—If your company develops products, it might seem obvious that a good way to grow is to create innovative products and services. But what if you are a service company or a reseller? That competitive edge might be in how you package and deliver your solution and the quality care you provide your customers. A long-term focus on differentiating your company can turn into more repeat business and referrals; growing revenue and a higher market value.
Acquire competitors–Another way to increase your company’s sales is to acquire your competitors. One IT service company I know started out as a small, traditional services business, charging by the hour or day. Just three years ago a small fraction of their sales came from recurring revenues. That’s when they decided to focus on managed, monthly services and, since that time; they’ve grown both organically and through acquisition. They’ve bought several small competitors and now have almost $3M in annual recurring revenue—and they’re still growing! While they’re not ready to sell the company, the business looks very attractive to potential buyers.
You likely have many more of your own ideas to grow your sales and you can adopt more than one of them to get even better results. I just wanted to give you a primer to get you started on the process.