How to cross new frontiers and boost revenue during this time
By Stefano Maifreni founder of Eggcelerate the B2B growth experts for SMEs
Many SMEs have a great story to tell. Maybe that’s true for you? Perhaps you had a vision that you couldn’t stop sharing with anyone who would listen. The idea grew into a pitch. Then you got funding, a product launch followed, you achieved traction in the marketplace and business began to soar. But a few years have passed since lift-off. Today, you’re ticking over OK, but you realise revenues are flat – that has to change. How do you boost your revenue, and what should you aim for exactly, especially in a period of uncertainty like this one?
There’s a point in the entrepreneurial journey when expanding abroad seems the right thing to do. However, the risks are significant. Over-reaching and over-spending can be enough to topple an otherwise-stable business. Unknown local market dynamics and factors could trip you up. And then there are those logistical and, in some cases, language hurdles.
Here are five steps to reduce those risks and manage the hurdles:
- Step #1: Choose your market
It’s easy to say ‘abroad’, but which country first? Research what the local competition is offering and the level of demand from customers. Also, use industry events (even virtual) and networking contacts to get insights from people who work in that country. Then consider what the culture and language gap may mean for you: Do you need English to be spoken? Do you have issues with time-zone or proximity? For example, is Brazil more suitable than the US, or South Africa better than Germany?
- Step #2: Fine-tune your proposition
Adjust your product or service offerings to fit the local market based on your research. Avoid the ‘currency conversion trap’, where you simply convert your price into the local currency. Instead, set your price according to the regional supply/demand and to reflect your real costs and need for a reasonable margin. Then present your proposition to a local audience and gather their feedback. Afterwards, tweak your offering again.
- Step #3: Structure your go-to-market strategy
Invest carefully. Use a virtual office, virtual contacts and a white-labelled salesforce to get up and running quickly. That way, you can exit in a relatively pain-free way if things don’t work out. However, target significant resources on exhibiting at local trade fairs, hiring native-level speakers, enriching your contact list and using outbound calling services and agents. This stage is critical, as you’ll also need to structure your lead-to-cash process to cater for international clients.
- Step #4: Be bold and go for the big fish
Even though you’ll be seen as a ‘challenger brand’ in the new market, some big clients will be fed up with the market leaders and may be willing to give you a hearing. Punch above your weight and push hard to win their accounts. Their business may give you a cushion to support your future growth in that country, plus some flagship deals you can reference when reaching out to other potential clients.
- Step #5: Strengthen your position
When regular revenue starts to arrive, it’s time to build up your local operation and move into the business-as-usual phase. At this point, it’ll be more cost-effective to take your own office, employ people and train them. You can then look beyond your initial verticals and also start to target numerous smaller customers. Then, when your local business is ticking over nicely, it’ll be time to consider your next move and your next country.
How to start? Your existing customer base holds the answers.
It’s not that easy, of course, and my talks with CEOs and Founders usually show that the trickiest of the steps is about fine-tuning the proposition. What should you do:
- Offer the same product to similar customers?
- Offer the same product to different verticals?
- Offer services alongside your product?
- Offer a completely different product?
- Open up new online/offline sales channels or use third-party channels?
You can’t pursue them all. Each requires time and money, which is in short supply. If the answer eludes you, that’s possibly because one of the crucial abilities allowing you to cross new frontiers has slipped from your grasp.
Tech-driven SMEs often have a particular problem. An excessive focus on the technology, combined with the pressure to grow over several years, can leave behind the essential asset required for future growth: customer insight.
Ask yourself, how much do you know about your customers? Is the data limited to just enough information to deliver your service and not much more? Perhaps even the individuals associated with these accounts left years ago! It’s easy to fall into this scenario. But you’re missing a massive opportunity. These customers could potentially hold a wealth of information, allowing you to cross new frontiers. For example, a common thread may run across your customer base, such as:
- Your customers are of a particular size, industry or geography;
- Your products fulfil a specific need you hadn’t realised;
- People with particular job titles purchase your products;
- Particular businesses are tailing off; others are ordering more.
Suddenly you start to realise which approaches succeeded from all your previous sales and marketing campaigns. These insights can influence the organisations you target, the employees you reach out to and the message you give them.
Growth or Profit? The cash problem.
Scaling up, however, can be a make-or-break moment. Perhaps your launch went well, and now you’ve got some traction, with a well-designed core product or service, some encouraging financial figures, and a thriving customer base. But where should you focus your additional budget: growth or profit?
New businesses usually look for growth because they need to get known, and are maybe challenging established players, if not industry assumptions. It is understandable.
However, focusing on growth does not mean the business model shouldn’t be profitable, or that the business should give its products or services away for the sake of reaching as many customers as possible.
There’s also the temptation to grow by starting to own more things and employing lots of salespeople and other staff on permanent contracts. Then you need a lease on larger premises, heftier insurance, HR people, lots of IT and much more. It might feel good at first. But in reality, you’re narrowing your options for the future and increasing your liabilities.
It’s also possible to run into problems quickly. Without orders, you’ll be like an empty machine. With too many orders, the operations side of your business may feel overwhelmed and unable to keep up with the delivery of products or services. Service levels may slide, and you may even lose valuable customers in all the chaos.
Profitability is not enough
That said, let’s assume that you get your budget allocation right, sales then increase, and you’re profitable. Is that good enough? The answer is: Possibly, but you could be missing something essential.
You may be wondering whether to focus on growth or profit, but there’s something more fundamental to any small business: cash. It’s essential to maintain cash sustainably.
I’ve seen growing, profitable businesses go bust because of a lack of cash-flow management. These are business tragedies where unique visions, ideas and careers went up in smoke – and all because bosses didn’t focus on the right dial at the controls. It’s almost as if their early success then became their downfall when it was time to scale.
Cash is the lifeblood of any business. It doesn’t matter what huge success exists just around the corner if your funds suddenly dry up. Never stop thinking “cash”.
Five tips for cash-flow sustainability
- Get a crystal-clear idea of your revenue and cost model for keeping the cash flowing smoothly.
- Build a balanced business strategy where growth and profitability are always in-sync with cash-flow – building on each other, rather than competing against each other.
- Manage your shareholders/stakeholders expectations, and yours! Get them to buy into a realistic strategy that’s for the medium/long-term, taking stress off the business.
- Even when your reserves are healthy, avoid the temptation to blow money on purchases you don’t need yet. You’ll thank yourself later.
- Always “think cash” and create a system that allows you to make accurate cash forecasts. It will give you a greater sense of confidence, security and a sense of your real financial health – so you make the best decisions around growth and sales.
How many times have we heard “the level of uncertainty we are experiencing today is unprecedented”, implying we have reached a peak … to see that uncertainty increase?
Unfortunately, entrepreneurs and small business will have to coexist with uncertainty.
What I am doing and advising my Clients to do is:
- Focus relentlessly on cash-generating activities: keep the cash flowing as much as you can, consider your options in terms of State support; BUT
- Don’t stop your thinking process: review your strategy and proposition – is there a way to differentiate? Who are your buyer personae, are you talking to them all along their journey as buyers?
- Focus on your current relationships and build a robust ecosystem with Clients, Suppliers and your staff: talk to your Clients about getting paid on time, pay your suppliers on time – it’s a chain that could grind to a halt if we stop paying each other
One sure thing NOT to do is to stand still. Do you know the story of the Buridan’s donkey? The scene goes like this: a donkey is equally hungry and thirsty but finds itself precisely midway between a stack of hay and a bucket of water. The paradox suggests the animal will die of hunger and thirst because it cannot make a rational decision to choose one over the other.
Finally, there’s one extra and a crucial point I haven’t mentioned. It’s whether you have the right mindset to grow. Are you ready for change — and do you have the drive and determination to see it through? Only then will your vision take shape.