Scaling your business needn’t be based on guesswork. Using information makes things far more predictable, says Georgina Nelson, pictured above, CEO and founder of TruRating
It was Napoleon Bonaparte who famously (but rather mean-spiritedly), said Britain was a nation of shopkeepers. But perhaps the updated version of this put-down quote should be that we are actually a nation of sole-proprietors instead. For while government statistics reveal there are an impressive 5.5 million small businesses in the UK – everything from digital stores as well as familiar physical shops – the surprising fact is that three-quarters of them (some 4.3 million in total) don’t actually employ anyone. Their business is – literally – just them.
Within many of these dynamic businesses there will be a significant number that are not only doing well and growing their profits, but they’re getting to that point where expansion seems the natural way forward. But then things stop. So why is this? Uncertainty is the most likely culprit – about hiring the right people, having the bandwidth and desires to manage them and all of the other concerns that come with choosing a new location and whether it will make money.
The lack of usable information within businesses (that can effectively give business owners the ‘green light’ they need to make expansion decisions for them) is holding many back from achieving growth. Without meaningful insight they can’t make informed decisions about the likely success of a second/third (or more) store. But we believe things don’t have to be like this. Good quality information destroys fear, installs confidence and creates opportunity.
So what do we mean by this? Clearly accurately deciding when and where to expand needs to come from knowing that existing customers love, and repeat-visit (and by how much), and will predictably do so elsewhere. But it’s also more nuanced than that. Without deeper loyalty and other service information, the fact is firms may mistakenly believe they are doing much (much) better than they really are.
Businesses need to ask themselves: how reliable is the information they base their growth plans on? As anyone who has politely said they loved their new haircut to their barber, (but secretly hated it, and will tell all their friends they hated it) can relate to, saying one thing doesn’t always mean it’s the truth. Give customers the chance to feedback anonymously though, and they’ll be far more honest.
The proof is in the pudding. Information from some of our café-owner clients shows that customers who were happy with the range of delicacies on offer to them spent 11 percent more per transaction that those who said they were disappointed by it. Additionally, retailers overall report that customers who say they are impressed by their customer service spend 10 percent more per average transaction than those who say they are disappointed.
Information like this is gold dust in terms of being able to give business owners the confidence to take the plunge and repeat the product offering in a brand new location. When you think about it like this, it’s actually free market research. Even when a store is scoring really well, there are always things that can be improved – and finding these out is vital to knowing whether you have the ingredients to grow.
At the end of the day, scaling up any business is all about protecting existing revenue, analysing what’s working well and being able to monitor growth – and all without losing sight of your precious customer experience. For some small business owners, the way they chose to achieve this scale is be through a leap of faith, relying on ‘gut’ feel, or just being brave (but potentially reckless). Nowadays though, growing a business doesn’t need to rely on such finger-in-the-air methods.