Development Plan

How To Create A Business Development Plan

Kurt GraverBusiness Development, Business Start-up Advice

Whether you are just starting up or an established business, every business has room for improvement. The market is constantly changing. If you are not planning to improve and grow your business, you are just stagnating and risking sustainability.

This is why the stock market value of companies crashes when they announce lower-than-predicted sales growth. Growth is a good sign; it doesn’t have to be sales. Increased customers, web traffic, or users is also a positive sign.

I cannot stress enough the importance of growing the key metrics in your business.

Growing sales is different from increasing profitability. If you maintain year-on-year sales, you reduce your costs by ten per cent, and you are still doing well.

To 10x your business, you need to increase sales while keeping costs controllable and correlated with your sales growth.

There are four main ways to improve sales in your business.

  1. More customers
  2. Improve Conversion Rates
  3. Increasing Average Transaction Value
  4. Increasing Number Of Transactions

To increase profitability, you need to

  1. Manage Fixed Costs
  2. Ensure variable cost growth correlates with sales growth

For example, have a look at the sample company metrics below:

Business Development Plan

Now have a look at the same company’s metrics with some minor improvements.

improved business model - Business Development Plan

Improving the six metrics by just 5% resulted in a 66% profit increase.

Imagine what could be possible if you could find a way to improve them by 10%, 20% or even more.

In this blog, we will explore each of these methods, using seven easy-to-implement methods of increasing profitability quickly.

1. More Leads

Before a customer becomes a customer, they will usually become a lead beforehand. Understanding how much you pay for a lead is essential to running and growing your business.

A Lead – Is someone in your target demographic and market who has expressed a need and is open to learning more about your solutions.

You need to understand how much new leads and prospects are worth to your business. A simple calculation to determine how much you pay for leads is dividing your monthly marketing spend by the number of new leads you get each month.

A simple way to improve your cost per lead is to ensure all marketing channels are measurable. Cut out any areas that do not result in tangible results. Test and determine what works for you and amplify any areas producing results.

If your sales process works, the more leads you get, the more you will convert into customers.

2. Improve Conversion Rates

Conversion rates are “the success” rate where you get a person to complete your desired action. An example is a pay-per-click (PPC) campaign where you want them to buy a product.

To improve conversion rates, you must analyse why people are not doing what you want them to do on your website and make changes. Sometimes, small changes make a difference, but you must be prepared to make drastic changes to make significant improvements.

3. Increase Transaction Value

“55% of customers would pay extra to guarantee a better service,” – Defaqto research.

Most customers buy based on value, not price.

If you are providing value for your existing customers, it would be wise to quantify precisely what your goods or services are worth.

You may discover that even if you raised the price by 10%, your customer would still consider it value for money.

Try to find a “biting point” for your price increase where it doesn’t affect volumes.

Even if it affects volumes, you will make more of a profit on each unit.

4. Increase Number Of Transactions

“The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20%” – Marketing Metrics.

Your best customers are your existing customers. Find new ways to deepen your relationship with existing customers to improve their experience.

Offer them a total solution to their problem.

If this means you have to cross-sell additional related products or form a partnership with another company, then do so.

5. Variable Costs

You only incur variable costs when you make a product or sell one.

They are based on your consumption.

Many costs have fixed and variable cost components.

Examples of variable costs are:

Marketing
Some staffing costs
Materials

When trying to keep costs down, you need to determine which variable costs make the most impact.

Strip out anything that does not add value to the business.

6. Fixed Costs

Fixed costs are fixed every month or year, like rent or insurance.

Fixed costs should be kept to a minimum, making your business cost base agile and allowing you to increase or decrease expenditure depending on when you are busy.

Start by reviewing your long-term fixed contracts and agree on flexible agreements as soon as possible.

Challenge your fixed costs. Do you need what you are buying?

Remember, your aim should be to provide as much value to your customers as possible. Anything that doesn’t add to their experience has the potential to be eliminated.

Where possible, treat staff as a variable cost, not a fixed cost.

Every company has permanent employees who do not contribute as much as they could.

To eliminate the problem of not getting value for money by employing staff on a fixed-term contract of 6 months to 2 years.

Business Growth Mistakes To Avoid

Business owners make five common mistakes when trying to grow their businesses.

1. They Do Not Have A Business Development Plan

Your business plan should be the key driver in your growth planning. It contains your revenue expectations, marketing plan and sales plan.

Your business plan should help you understand exactly what you need to do operationally to grow. Targets will be set for your marketing campaigns, sales conversions and spending. It is also very important to set targets for specific metrics to help you understand your business and measure the success of your growth plans.

Below are some key performance indicators KPIs you should set targets for in your business plan and then review performance against.

  • Customer Acquisition Cost (CAC)
  • Average Customer Spend
  • Customer Retention %
  • Attrition Rate %
  • Referral Rate
  • Sales Revenue
  • Gross Margin%
  • Net Margin %
  • Overhead to Revenue %
  • Variable Cost %

2. They Do Not Understand Their Business Enough To Grow

Some business owners do not understand how their business is performing to grow successfully. You cannot grow a business sustainably unless your business model is sound and your operations efficient. For example, if your customer growth rate is 10%, but you have a customer attrition rate of 20%.

To grow, you must find out why you are losing so many customers and solve this problem first. Once this issue has been rectified it, you can then try to grow your customers.

3. They Lack Funding

Sometimes, all a business requires to grow is a cash injection to purchase extra stock or pay for a specific marketing campaign.

Here, you need to find the best funding source for your business.

A bank loan or overdraft facility is a good option if you have an excellent trading history. Banks are more likely to lend to you if you are established and know precisely what you want to do with the money.

If you do not, you will have to find an alternative funding source. Your main options for funding are discussed here.

4. They Don’t Have The Expertise Internally

This is very important; firstly, you need the correct staff to enable you to identify growth opportunities. This could mean you need to employ someone with a specific skillset; alternatively, you can hire someone you can delegate your day-to-day activities to while you handle the strategic planning of the business.

5. Chosen the wrong growth strategy

There are three ways to grow your business.

  1. Getting more customers
  2. Increasing the number of transactions per customer
  3. Increasing the value of each transaction

Choosing the correct growth strategy is crucial to your actual plan. You have to be sure what type of growth you are looking for.

There are many available to businesses; choosing one that fits your business and is sustainable is important.

The most popular growth strategies businesses choose are:

  1. Open up a new location.
  2. Entry into a new market
  3. New sales channels
  4. Developing new products/services
  5. Amplification of marketing
  6. Promotions
  7. Price changes
  8. Partnerships & Strategic Alliances
  9. Mergers & Acquisitions
  10. Franchising their business model
  11. Licencing your product / increasing sales channels

Conclusion

Growing a business sustainably is difficult. The key to success is business analysis, planning and performance management. The first step is to understand your business, target market and competitors.

Using this knowledge, find a suitable growth strategy that matches your business competencies, ambition and funding. Review performance against your growth plan regularly, and do not be too stubborn to pivot and change the direction of the business.

Engine optimisation is a fundamental part of running your business. Mapping out how you can improve every part of your business is your responsibility as a business owner.

The market, so you need to take time out each month to review how your business will overcome the challenges ahead and take advantage of your opportunities.

Seven Steps to Profitability provides some quick ways to improve your bottom line, but improvements will be short-lived unless integrated into an engine optimisation program.

Make Your Business A Success

The key to a successful business can be found in our Business Success Formula. If you structure your business using the Business Success Formula as your blueprint, you will significantly decrease your chance of failure.

We assess your business and implement our business success formula in our business assessment service, The Business 360. It provides you with all the information to 10x your business in weeks. You can check it out here.

Related Posts