Business owners generally have a very good handle on the costs, budgets and operations of their existing business. However, when it comes to estimating and forecasting what it will take to generate new growth, many business owners find five common gaps that must be filled to achieve their growth plan.
Time. Most business owners have very little extra capacity and must find ways to leverage themselves if they expect to generate new growth. According to SunTrust business owner research, the average business owner spends most of his time (43 percent) on customers and growth-related activities, and does 70 percent of the selling for his company.
People. Business owners spend only 17 percent of their time hiring and developing employees. They reach out to fewer than 10 people with their growth plans to get help thinking through and then implementing their plans. Time-starved business owners need to find ways to leverage their time through employees and partners, and ask for help when needed.
Skills. Remember that everything is harder than it appears from the outside. Identify the skills and knowledge you need, then find people who can provide it. For example, small business owners rate themselves better at servicing existing customers than developing new clients, acquiring new customers, or hiring and developing employees.
Customers. Growing “share of wallet” with current customers is easier and usually more profitable than growing “share of market” with new customers. Business owners tell us that most (56 percent) of their sales growth comes from current customers. It is more than four times less expensive to sell to existing customers than it is to acquire new ones. Most small businesses are far better at customer service than they are at prospecting.
Products. Entrepreneurs often make the mistake of counting heavily on new products in their growth plans. However, business owners tell us that selling new products to existing customers contributed only 12 percent of their total sales growth. The reality is that new products are often difficult to get off the ground. Forty-two percent of businesses launch new products every year, yet it’s estimated that more than half of those new products will be canceled or will not turn out to be economically viable.(1)
1 Winning at New Products: Accelerating the Process from Idea to Launch, Third Edition, Robert G. Cooper, New York, 2001.
About SunTrust Business Owner Research: SunTrust surveys small business owners and advisors as part of its ongoing business seminars and symposiums. The small business owners attending these events include both SunTrust client and non-client business owners and are representative of the broad spectrum of businesses located in the SunTrust markets. The research cited in this report is extracted from these 5,425 small business owner surveys collected between 2007 and 2011.
This article is general in nature and does not constitute legal, tax, or investment advice. SunTrust makes no warranties as to accuracy or completeness of this information, does not endorse any non-SunTrust companies, products, or services described here, and takes no liability for your use of this information.