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You know the next step is to grow, and to reach your business goals changes need to be made. But like with any change, the process – and taking action – can be daunting. Especially if a lot of change needs to come about or your end goal seems almost impossible without a lot of work.
This change loop is where a lot of businesses get stuck, with the amount of work involved almost paralysing. But by starting small, you can break the spell and make strategic, manageable changes that put you on the path to success.
Here’s 1% changes you can implement in your business to bring about great change, right from our business advisory team.
Why incremental 1% changes work
Former Apple CEO Steve Jobs once said:
“You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future.”
How does this apply to your business journey?
Big wins and achievements are great, but we often forget one very important fact: these never occur after a single event. It’s a result of a series of tiny changes (and dots) that propel us forward.
While a small 1% change might seem like a small dot of change, it can lead to great change in the future. And you’ll be surprised how far you’ve come when looking back.
5 small changes you can make to business that make a big difference
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Improve your profit margin
While our financial advisors recommend regularly reviewing pricing, real revenue growth can be unlocked when reviewing your margins.
Your profit margin is how much you make after all your expenses have been deducted, and can be impacted by a number of factors. In construction, this could be labour and material costs, supply chain distributions, and even changes in regulations.
To improve your profit margin, the first step is understanding your financials. For some, this step can be daunting enough. However, this is where leaving the numbers to a financial advisor like Mead Partners can come in handy.
By reviewing your historical data and analysing profit margins over time, you can fine-tune your profit margin over time. Here – just like with other changes – you can make incremental changes over time to increase your profit margin.
For example:
Average job revenue Average margin per job Average profit per job $1,000,000 10% $100,000 $1,000,000 11% (+1%) $110,000 (+$10K) Over 10 jobs in the year, that 1% change could be a cheeky $100 thousand in your back pocket.
Making these small changes also allows you to test and learn where your margin sweet spot is.
> Read on: What margin should builders be adding to projects?
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Upselling and cross-selling
The hardest part of business is building relationships and converting customers. So, if you’ve already won the customer and have built trust, why not upsell or cross-sell another service?
Here, it could be as simple as upselling them into a premium service or additional feature. Even better if these are services that have a greater profit margin.
You could also cross-selling into another service that you offer. For example, if they have engaged with you for building services, by not cross-sell your home maintenance services?
These little variations can make a big difference to your revenue. And with costs already outlined for trades, materials and labour, you could decrease associated costs to help your bottom line.
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Delegate and outsource time-consuming activities
We all have our areas of expertise. Jumping onto tasks that are outside of this might appear to save money, but if it takes you 10 times longer than an expert … are you really saving money?
Something that is time consuming for you could take an expert no time at all. It’s also taking you away from areas you add the most value in, such as project management, team mentoring or closing sales.
Experts also come with the experience to spot opportunity areas that can be streamlined, enhanced or automated, enhancing how you do business. Using a business adviser also means you get more insight into financials, helping you make more informed business decisions.
Upskilling your team also adds more overall value to your business and removes the pressure that only falls on your shoulders and avoids single points of dependency.
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Improve your services
Making small service changes can help you drive more value and better meet customer demands. The more value customers feel they are getting, the more willing they are to spend more.
Small improvements can be found by talking to your customers, getting feedback on how to improve the service, add more value, and improve the customer experience.
You might also have a wealth of improvement ideas right under your nose. Working with customers and on the job day in, day out, your team could have special insight to drive improve how work is done. In turn, enhancing customer improvements and customer satisfaction.
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Small KPI and target changes
So you need to grow your business by 20%. This doesn’t happen overnight, and it can be daunting to make that jump straight away.
By slowly increasing your targets, you can gradually make changes. It also allows you to be more calculated and test and learn.
Here, working with your business adviser to forecast revenue growth and create a gradual, more manageable grow rate can ease a lot of growing pains. It also helps you reduce revenue risks by knowing when a downturn in business might be, without it impacting your growth business goal for the year.
By leveraging forecasting, you can both tweak monthly projections according to seasonal trends, upcoming or projected jobs, and also any industry impacts. In turn, creating targets and KPIs for you and your team that seem in reach.
Your business advisory team can also provide you with growth strategies to help you meet these targets with ease, with an action plan to get there.
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