When starting a new business or making a decision to grow or expand, the identification of your rate range – the prices for your products and services – is crucial for your success and future earnings. Choosing slow stable progress is safe, but you’re at risk of getting stuck in a stagnant slough. The choice of a dynamic pace, on the other hand, will hold your business afloat, but you can miss something important when growing fast.
How can you encourage everyone contributing to the business to comply with this pace and sustain high market demands? This article is for those ambitious entrepreneurs who have asked this question.
Think Well Before Taking Each Step
Choosing the right growth rate can be tricky. Therefore, familiarize yourself with your competitors to get an idea:
- Do research on similar offerings and what your competitors charge;
- Check the history of your competitors’ and customers’ feedback and best practices;
- Try to get a sense of the right rate range by examining the strategies of similar firms in the market; and,
- Examine project budgets you’d like to be involved.
Undoubtedly, there is no one-size-fits-all solution because markets, levels of experience, skills, education, and assets are different. Your company is unique and can develop its own core competencies. These factors should be taken into account when choosing the right rate range and pace.
Evaluate Your Current State and Growth Prospects
The choice of the right growth strategy also depends on your business’s current state and future direction. The metrics you choose depend on its development stage. Some metrics are more important, others less so. For example, start-ups tend to focus on business model validation metrics while mature companies focus on cost per acquisition of value of customer lifetime.
At the stage of expansion, for instance, the average order size or number of customers acquired are relevant metrics. At the stage of product market fit, monthly recurring revenue, customer satisfaction and renewals are the best KPIs to identify a right rate range for growth. If you haven’t introduced your product to the market yet, customer interviews, awareness and stickiness will make a perfect fit.
Pick up metrics that fit your individual requirements and grow your business!
Set Relevant KPIs
Identify key performance indicators (KPIs) to choose the right rate range for your business growth. KPIs will help quantify your business easily if you align them with company goals. For example, you may wish to target 5% growth in sales by the end of the next month. In this case, the KPIs will include sales per day, conversion rate and daily traffic on your website. If you need to increase your conversion rate by 1% in the next quarter, the KPIs will include this, competitor pricing, shipping rate, and the cart abandonment rate.
Conduct a situational analysis of your goals and factual performance will help you gain insight into the current state of and prospects for business growth.
Manage Your Cash Flow
Cash flow analysis is crucial to identify your business growth pace because cash constraints can significantly limit the growth of your business. Planning the right rate range heavily depends on this because both limiting growth and overtrading can be fatal for your business.
Cash flow analysis will help you plan the use of your resources and assess available opportunities. Controlling working capital is also essential for maximisation of cash flow. Effective credit management and controlling overdue debts additionally makes an impact on cash flow.
Stock control and supplier management are becoming increasingly important for business growth as well. For example, excessive amounts of obsolete stock can make a negative impact on cash flow. Therefore, it needs to be cleared up from time to time. Reduce the delivery cycle, switch to just-in-time suppliers, and the like. Planning your revenues and expenses in advance will help you identify financing needs and arrange funding to choose the correct rate range for business growth.
Hire the Right People
Mediocre people with incorrect attitudes can hold your business back. As people are the main source of competitive advantage for any business, this is – or should be – one of your main expense items. It is therefore also an area for which you need to work out an appropriate rate range. If you haven’t been investing in talent, it is likely because business budgets have been allocated to important growth areas. You can still, however, find the right people and make this resource affordable at the same time.
Presently, many businesses hire in the same way because most traditional talent sources are similar. They need to start hiring differently, however, if they want to remain competitive in the market. It can be difficult to change the work pace of an established company, but building a coherent network will make your task as the business owner easier and allow the sharing of responsibilities to save you energy for more important tasks.
Hiring freelancers is one of the available alternatives which can help get things done right at a reasonable rate range. In this way, you can get rid of all the overhead costs associated with hiring regular workers. Freelancers also cover their own healthcare expenses and taxes, unburdening you so you can make more affordable hires even if you select more experienced individuals. In addition, you can hire them only when you need work done and pay them only for work done rather than having them sit in the office during the lean season taking advantage of the free coffee and fast internet to browse social media. This helps save a lot on salary costs – money that you can properly invest in hiring the right people to push your business forward.
Mind the Customer Perspective
It’s not easy to define what customers value, but this is an essential point to start with. If we’ve learned anything from the mega-marketplace Amazon, it’s that customer satisfaction will pave your way to success. The number of existing and potential customers for your business will help you identify the right rate of development and rate range to charge. You can easily go from $0 to $500,000 or even up to six-figures in 3-5 years.
Basically, your customers want the same things as you do: less stress, streamlined processes, and continuous progress. Having this perspective in mind, you will approach success quickly. Think of what can make things easier for them, and how to best represent them. Create a clear timeline that outlines these deliverables to help you and everyone involved in the business to stay on the same page. Take care of your customers using this guideline and show them your readiness to go the extra mile for their satisfaction to increase your profitability.
Problem Solve and Control Risk
In the frequently changing business environment that we have currently, working in a crisis mode is not uncommon. New challenges emerge every day, and businesses need to adapt and develop appropriate troubleshooting and risk control strategies. You need to be alert to problems and set priorities. It can be anything from the protection of intellectual property to providing exceptional customer service. Whatever it is for your business, you need to prioritize options that can boost or limit the growth of your business. Undoubtedly, troubleshooting strategies and risk control are crucial for the development of your business. They will make a significant impact on your choice of right rate range as well.
Develop Efficient Managerial Systems
Tracking financial records, customer data, work details, regulatory requirements and other business information requires creating an appropriate managerial control system. It is important to correctly delegate tasks and responsibilities according to the pace of growth of your business. The larger the business, the harder it is to ensure proper functioning and internal information sharing. The right infrastructure can help you choose the right pace of development and rate range so that your business does not overshoot or stagnate. Also, you will need to pay attention to your contracts, terms and conditions, effective hiring procedures, quality control, and the like. Invest in creating the right systems – or hire a freelance expert to help you – to guide more efficient operations and boost your business potential.
If you’re ready to start adjusting your rate range to promote sustainable and fast business growth, start taking these steps today:
- Choose appropriate growth strategy for your business model and market
- Evaluate the current position of your company and its growth perspectives based on an analysis of each of your competitors and their rate range
- Choose right KPI system and implement it
- Pay close attention to cash flow management
- Invest in hiring the right people who have the skills and experience to help push business growth
- Explore the needs of your customers and respond to them with enthusiasm
- Pay close attention to troubleshooting and risk control at every step
- Develop an appropriate managerial system, implement it at all levels, and improve it constantly as you proceed
Before you make any decision, just ask yourself, “What can I do to grow my business?” This will help you to identify and solidify your goals and align your strategy accordingly. The right rate range to grow your business will depend on this foundational strategy and how you plan and proceed through the growth stages of your business development. You may try several options before you find the right one, which is completely fine. This process will help you better understand your business and its needs. After all, learning by doing is the best approach when you are dealing with such a unique entity as a business.
Emily Watts is a professional custom paper writer whose great works you can find at SameDayPapers. She is also a business analyst who has her own small business and provides lectures for those who want to enhance the level of their business quickly and effectively.